54 percent of the 116 Unrestricted Free Agents (UFA) and 60 percent of players with no-trade clauses who changed teams picked teams with lower taxes according to a new report released jointly by the Canadian Taxpayers Federation (CTF) and Americans for Tax Reform (ATR) and compiled by CTF Research Director Jeff Bowes.
The study, entitled Major Penalty for High Taxes examines the interaction between low tax rates and player movement in the NHL by analyzing federal, provincial, state, and local income and payroll taxes of NHL players. The report also ranks teams on their “true cap” by comparing how tax rates of different teams interacts with the NHL salary cap.
“Successful hockey players can choose their team in free agency and thus, their hometown for tax purposes. So can millions of Americans and Canadians who move from high tax areas to low tax areas. Better than any poll, this tells us what taxpayers want: Lower taxes and less government,” said Grover Norquist, president of Americans for Tax Reform.
Key findings include:
- The American teams with no state income tax have the lowest tax rates in the NHL. In 2015 Dallas Stars, Florida Panthers, Nashville Predators and Tampa Bay Lightning are tied for first at 40.6%.
- The Montreal Canadiens have the highest tax rate at 54.2%, beating out the California teams. The Anaheim Ducks, Los Angeles Kings and San Jose Sharks are tied for second-last at 53.1%.
- Having a no-trade contract clause gives players the power to avoid being sent to high tax jurisdictions. Tyler Myers saved the most, at $474,146, by moving from Buffalo to Winnipeg.
- Players without no-trade clauses could suffer a big take-home pay cut when traded to a high-tax jurisdiction. Sergei Gonchar’s move from Dallas to Montreal would have cost him an annualized $664,241 in taxes, although he won’t be playing there next year. Keith Yandle’s trade from Arizona to the Rangers will cost him an extra $364,964.
- 60% of players with some kind of no-trade clause who changed teams picked teams with lower taxes.
- Out of the 116 UFAs signing with a new team since July 1, 54% went to cities where they will pay less tax. Players moving to lower-tax jurisdictions will save more than $4 million.
- From 2012 to 2013, 16,207 people making more than $200,000 lowered their taxes by moving to Florida, and another 7,315 to Texas. High-tax jurisdictions are losing those high-income individuals, with New York losing 14,756 in one year.
- In the last 10 years 266,520 people moved from the high-tax provinces east of Manitoba to live somewhere else in Canada, and a lot of them moved to low-tax Alberta, which had net interprovincial migration of 248,197.
“The numbers don’t lie; NHL players take a financial hit to play in certain jurisdictions,” said paper author and CTF Research Director Jeff Bowes. “Obviously, there are other factors at play besides taxes, but the fact remains that significant disparities in tax rates can penalize players when they move between teams.”
The full report can be accessed here.