U.S. Tax Changes Level the Playing Field for Canadian NHL Teams

[Jets4Life]

"On January 1, 2013, the Bush tax cuts expired, returning the highest individual U.S. tax rate to 39.6% from the 2012 high of 35%. The Pease adjustment—the itemized deduction phase-out—which can limit a high-earner’s deductions by as much as 80%, returned after a three-year hiatus. Also, the 0.9% Medicare Surtax was instituted as part of the Affordable Care Act (aka, Obamacare).

This is great news for players on the teams that finished 12th and 13th (out of 15) in the Western Conference last year. The Edmonton Oilers and Calgary Flames hail from the tax haven of Alberta,Canada, which boasts the lowest income tax rate in Canada. With its 10% provincial rate combined with Canada’s 29% federal rate, Alberta’s marginal tax rate is lower than the U.S.’s top 2013 federal rate, without regard to state taxes.

This means Calgary and Edmonton players receive the highest after-tax income of any in the NHL, including Florida. Additionally, unlike Florida, Alberta has relatively low property taxes and no sales tax. Oh, and they receive free healthcare without paying a 0.9% tax on income over $200,000."

source: www.forbes.com/sites/kurtbadenhausen/2013/10/01/u-s-tax-changes-level-the-playing-field-for-canadian-nhl-teams/

This is great news for Canadian NHL teams. I have a feeling that more and more US star players will be requesting to play north of the border, as the taxes are only going to go up in America.

[TurnedTheCorner]

Winnipeg crying poor as always. F'n Jets.

[Poe969]

I'm pretty sure a lot of players would take less to not have to play in winnipeg.

[nfotiu]

Well, I agree this is good for my favorite hockey team. I kind of find it a bit odd that Canadian millionaire get to keep more of their salary in Canada, but middle class families with a couple kids and a mortgage pay far less in the US.

[Itse]

Very interesting news, thanks.

Even though we're not going to be huge buyers in the FA market any time soon, every little bit certainly helps.

[Jets4Life]

Originally Posted by Poe969

I'm pretty sure a lot of players would take less to not have to play in winnipeg.

I know what you mean. I hate those whiny little b**ches....

[the_only_turek_fan]

Additionally, state taxes are a hidden cost for players on American teams. For example, we estimate that a Florida/Tampa/Edmonton/Calgary player pays an average of 6.5% tax for the 30% of the time he spends on the road in taxable jurisdictions, or about $43,750. To the Panther or Lightning player, these taxes receive a now-limited deduction on his federal return. To a Flame or Oiler, this tax is treated as a foreign tax on his Canadian return, for which he receives a dollar-for-dollar credit. There is also no jock tax in Canada, so an Oiler would not pay Quebec tax for a game in Montreal, etc. The jock tax’s net cost to the Floridian is about $32,600.

So if I understand this correctly, if you play for the Dallas Stars for example (I believe Texas has not state income tax) and you play a game in a state that has state income tax Ex. California, you have to pay that tax even though you are based in Texas?

[Flashpoint]

Originally Posted by Jets4Life

I have a feeling that more and more US star players will be requesting to play north of the border, as the taxes are only going to go up in America.

Or not. That's just speculative on your part, and while I don't know you, I'll guess you're not an economist.

Also, to expect players to want to return "home" just because that's where they are from... it doesn't necessarily follow. The Flames learned that first hand with Brad Stuart. We do see it trotted out fairly often though - the "hometown discount" mentality.

Different people have different priorities, but asking myself which NHL cities I would live in given a 10% fluctuation in my salary, I would live almost anywhere before I would live in Calgary, Edmonton, or Winnipeg. That's said as someone who grew up on the prairies and lived in all three places throughout my childhood. I enjoyed living there, and liked the outdoors, skiing, and pond hockey.

But as an adult it was just too damn cold for my blood, and all three markets don't have the food, night life, or metropolitan cache that a lot of larger markets do. That's something I didn't learn until I lived elsewhere and saw what other places had to offer.

I love Calgary. But wearing sandals and shorts in October is pretty decent too.

[Erick Estrada]

It doesn't hurt the cause when trying to lure players to play for the Flames but I at the same time I don't know if the savings are enough for some players to warrant them overlooking the current state of the team or maybe the climate depending on their personal taste. It's good to see that money at least is no longer an obstacle although I'm sure the Flames would want a player joining the team for more reasons than just the savings.

[Phil Russell]

Thanks. Just what I needed. Another reminder that I picked the wrong generation to be a Canadian immigrant to the US (from AB with the lowest tax burden in NA, to NY with the highest). Property taxes on my 1,800 sq. ft home in Upstate NY are significantly higher than my Dad's 4,000 sq. ft home in Calgary. And I pay through the freek'n teeth for employer-provided healthcare. It's a good time to be Canadian.

[Poe969]

Originally Posted by Jets4Life

Not the ones that have lived in Winnipeg at one point of their life...

So you think Toews is going to be playing for the Jets when he's a UFA?

Instead of getting into an arguement about winnipeg being desireable or not, I'll just say that most players would prefer other places to play. Even if they have lived in the peg or close to it, like Toews, they will most likely play in other places because of a few other reasons. This doesn't really do much for making players decide which teams to play for as if they make 4 million instead of 6 million a year probably isn't reason enough to want toplay some places (for most star players)

[MarchHare]

I kind of find it a bit odd that Canadian millionaire get to keep more of their salary in Canada, but middle class families with a couple kids and a mortgage pay far less in the US.

Is that true when you do an apples-to-apples comparison and add the health insurance bill to what a middle class American family pays?

[Phil Russell]

Originally Posted by nfotiu

Well, I agree this is good for my favorite hockey team. I kind of find it a bit odd that Canadian millionaire get to keep more of their salary in Canada, but middle class families with a couple kids and a mortgage pay far less in the US.

Your generalization about the middle class having an easier go of it in the US was true at one time but it's a lot more complicated today. You might do better in a place like TX or OK with low cost of living and low taxes (and crappy services and infrastructure and schools, high crime rates etc.). But in CA or NY or the kinds of places with a more Canadian-style quality of living, life for the middle class is generally harder than in Canada, certainly AB. The Great Recession hit a hell of a lot harder in the USA and in states worth raising a family in the tax rate is high and the cost of health care is staggering. At least that's my view.

[the2bears]

Originally Posted by Phil Russell

Thanks. Just what I needed. Another reminder that I picked the wrong generation to be a Canadian immigrant to the US (from AB with the lowest tax burden in NA, to NY with the highest). Property taxes on my 1,800 sq. ft home in Upstate NY are significantly higher than my Dad's 4,000 sq. ft home in Calgary. And I pay through the freek'n teeth for employer-provided healthcare. It's a good time to be Canadian.

On the other hand, there's no way I'd get the salary I have here (in SJ) if I was in Calgary. Or at least I don't see it when checking out the available jobs.

[seattleflamer]

There is an agenda here and the underlying (and reinforced) message to a Forbes reader--whose likely demographic is American, right of center, high income and a high net worth individual--is under the Obama administration (since 2012), millionaires will pay higher taxes than even "tax heavy" Canada. It fits nicely with the class warfare meme the right believes Obama is waging and even the OP editorialized will continue to happen.

The article itself has some notable inaccuracies/omissions such as the 5% GST which is a sales tax, the other side of free health care that millionaires aren't accustomed to such as the difficulty in finding a primary, the extended waiting times for procedures, emergency room/clinics and the crumbling healthcare infrastructure.

Not to mention one's net net income after you factor cost of living between say Miami and Calgary. Just as an example, Seattle's cost of living is 8%-10% higher than Miami's in some calculators and from my experience, Calgary's cost of living is higher than Seattle's from gas, food, utilities, entertainment etc.

[Macho0978]

Throw on top of this aren't all players paid in USD? So because the loonie is lower than the american dollar that would be another plus for players signing on a Canadian team

[Jets4Life]

Originally Posted by Flashpoint

Or not. That's just speculative on your part, and while I don't know you, I'll guess you're not an economist.

Not an economist. I just tend to keep up on World events, and judging by their massive deficit and fiscal crisis, I would not expect these changes to be reversed at any time in the future. In fact, I think huge tax breaks and enormous write-offs by large corporations and very wealthy Americans will be reduced even further in the near future.

However, that's just my opinion, as I am no economist. I would like to hear from one though, as he/she could shed better insight on this topic...

[Enoch Root]

Cost of living things like gas are irrelevant...

A hockey player making $5m will have the same gas expense as someone making $50k.

It's all about the taxes - we are talking 6 digits here, not an extra few hundred dollars because groceries are more expensive.

[nfotiu]

Originally Posted by Phil Russell

Your generalization about the middle class having an easier go of it in the US was true at one time but it's a lot more complicated today. You might do better in a place like TX or OK with low cost of living and low taxes (and crappy services and infrastructure and schools, high crime rates etc.). But in CA or NY or the kinds of places with a more Canadian-style quality of living, life for the middle class is generally harder than in Canada, certainly AB. The Great Recession hit a hell of a lot harder in the USA and in states worth raising a family in the tax rate is high and the cost of health care is staggering. At least that's my view.

I guess it all depends. I guess I kind of lucked into a little pocket of the best of everything. My effective tax rate in the US is about 13%, which is much less than I'd pay even in Alberta. I used to have to do both country's returns, and when I was single without a house, taxes were definitely higher in the US, but with a family and mortgage, taxes are significantly cheaper in the US/Virginia.

[Zevo]

Originally Posted by Erick Estrada

It doesn't hurt the cause when trying to lure players to play for the Flames but I at the same time I don't know if the savings are enough for some players to warrant them overlooking the current state of the team or maybe the climate depending on their personal taste. It's good to see that money at least is no longer an obstacle although I'm sure the Flames would want a player joining the team for more reasons than just the savings.

I'm sure some players would be swayed. On a 2.5 million a year contract, a player will make over 250,000 more per year in Calgary than they would in Montreal, San Jose, L.A., Anaheim, Ottawa Toronto....but ya, probably not enough to go to Edmonton.

On a 5 year, 5 million/year contract a player would take home an extra 2.5 million+. Not exactly chump change.

I can see some players who have already made a boat load of cash going with a chance to win the cup though.