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News

American NHL teams’ secret for nabbing talent: tax policy

OTTAWA — As changes to Canada’s capital-gains taxes make some entrepreneurs think about going elsewhere to make their fortunes, American hockey teams are scoring big in the yearly frenzy of trades and free agent signings—especially in low-tax states.

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American NHL teams’ secret for nabbing talent: tax policy

Why the Stanley Cup is spending so much time in the Sun Belt these days

By David Reevely
A hockey team poses with the Stanley Cup trophy on an ice rink, surrounded by cheering crowd and celebratory pyrotechnics. Players are wearing red uniforms and championship hats.
The Florida Panthers with the Stanley Cup on June 24, 2024. Florida's NHL teams are popular among top NHL free agents, in part because the state has no income tax. Photo: AP Photo/Wilfredo Lee
Jul 3, 2024
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OTTAWA — As changes to Canada’s capital-gains taxes make some entrepreneurs think about going elsewhere to make their fortunes, American hockey teams are scoring big in the yearly frenzy of trades and free agent signings—especially in low-tax states.

Of the 10 biggest new contracts, only two—Tyler Toffoli’s US$6 million a year in San José and Matt Roy’s US$5.75 million in Washington, D.C.—take players to places where they’ll give more than a few percentage points of their pay to state or district governments.

The biggest payday is for Tampa Bay’s new forward Jake Guentzel, worth an average of US$9 million a year for seven years. He’ll pay zero state income tax while playing there, because Florida doesn’t levy one.

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Nor will Florida Panther Sam Reinhart, who signed a new deal worth US$8.625 million a year. Forward Steve Stamkos signed a contract worth US$8 million a year in Nashville, where the state income tax is also zero. Elias Lindholm left Vancouver for a deal with Boston worth US$7.75 million a year; Massachusetts’s personal income tax rate is a flat five per cent.

Canadian fans moan about all the time the Stanley Cup has spent lately in the U.S. Sun Belt, in cities where you can’t freeze a backyard rink even in January. What else do those places have in common? Low taxes.

NHL players make a lot of money: the league minimum is US$775,000 a season. But their earning years are limited and they move around. Taxes buy public services, but if multimillionaires in their 20s care deeply about the local schools, welfare services, hospitals or nursing homes, it’s not usually because they need to.

The income tax issue affects Canadian teams acutely: Even tax-allergic Alberta charges top-earning Oilers and Flames 15 per cent in provincial tax. Maple Leafs pay 13.16 per cent, with a surtax applied to their tax amounts that can push the effective top rate past 20 per cent. Jets pay 17.4 per cent. Canucks, 20.5 per cent. Montreal Canadiens pay marginal provincial taxes of 25.75 per cent.

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Commissioner Gary Bettman has mused about adjusting the NHL salary cap to take account of the tax difference among the league’s cities. It’s tricky, he told Sportsnet’s Eric Engels, because costs of living also vary, but he didn’t treat it as a crazy idea.

In the last three years, the Leafs have lost early in the playoffs to Tampa, the Florida Panthers and Boston. Maybe a salary-cap adjustment would cover the talent they need to stop succumbing to low-tax teams.

Editor’s note: This story was updated to include the Ontario surtax that applies to top earners.

#economy #NHL #sports #taxes

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A hockey team poses with the Stanley Cup trophy on an ice rink, surrounded by cheering crowd and celebratory pyrotechnics. Players are wearing red uniforms and championship hats.

Photo: AP Photo/Wilfredo Lee

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