WASHINGTON, D.C. — A new study jointly-released by the Canadian Taxpayers Federation (CTF) and Americans for Tax Reform (ATR) reveals that of the 123 Unrestricted Free Agents who changed teams during the 2014 offseason, 57 percent of went to teams with lower taxes.
The study, titled Home Ice Tax Disadvantage looks at NHL team salary spending, personal income tax rates in the relevant province or state, and the “true cap,” which takes into consideration these rates. The purpose of the report is to show the impact that taxes – personal income taxes in particular – have on labor mobility. While the numbers are more extreme for NHL players, the concept is the same for millions of North American families.
“Injuries can damage your favorite sports team. So can high taxes in your state or province,” said Grover Norquist, president of Americans for Tax Reform.
Key findings include:
Of the 123 Unrestricted Free Agents who changed teams during the 2014 offseason, 57 percent went to teams with lower taxes. In total, those 78 players will pay $7,951,784 less in taxes next year.
From a tax standpoint, U.S. states are becoming less competitive compared to Canadian provinces: Six of the seven Canadian teams went up in the rankings between 2012 and 2014. Interestingly, Alberta’s combined federal and provincial taxes are now lower than the states that have no state income taxes. Of the 23 American teams, 21 of them fell in the rankings of best places to play between 2012 and 2014. Florida, Tampa Bay, Dallas, and Nashville fell from the top spot in 2012 to third best locations in 2014 to play from an income tax standpoint.
In dollar terms, the Los Angeles Kings players paid the highest total of $27.8 million to the federal government and $8.5 million to the state.
The Calgary Flames and Edmonton Oilers tied for the lowest jurisdictional tax rate at 38.5 percent with the Florida, Texas, and Tennessee teams close behind at 40.5 percent.
Players for the Montreal Canadiens paid the highest tax taxes with a tax rate of 53.9 percent.
Having a no trade clause gives the power to avoid being sent to high tax jurisdictions. Jason Spezza’s tax savings by moving from Ottawa to Dallas are $394,732.
Players without a no-trade clause face a pay cut when traded to a high-tax jurisdiction. PA Parenteau will have to pay $349,535 more in taxes after moving from Colorado to Montreal.
Benoit Pouliot will save the most taxes moving from the New York Rangers to the Edmonton Oilers. If he had signed the same deal in New York he would have had to pay $575,752 more in taxes.
“The numbers don’t lie; NHL players take a financial hit to play in certain jurisdictions,” said paper author and CTF National Research Director Jeff Bowes. “Obviously, there are other factors at play besides taxes, but the fact remains that disparities in tax rates leave some teams at a major disadvantage.”
“NHL players are just one example of highly skilled workers who have a choice of where to work” added CTF Federal Director Aaron Wudrick. “The same principles apply far beyond professional athletes, but also for doctors, engineers and CEOs of major companies. If high tax rates make it more difficult to attract free-agents in the NHL, it’s not a stretch to believe it’s also be hard to attract other highly skilled workers. Governments need to keep that in mind when they’re considering the impact of tax rates on attracting top talent.”
The CTF and ATR study on the taxes of NHL players can be found HERE.