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Captain Saku 09-24-2012 12:53 PM

Impact of new taxes increases on Habs
 
First of, let me be clear, this is by no mean meant to be a political debate. For those who don't know, new taxes increase are to be announced to those who make more than 130,000$ a year going from 48% to 55% rate.

I would like to discuss on a pure hockey operation, what do you think the impact would be on the habs for keeping their own players and attracting UFAs? It's getting a bit unfair honestly. We will have to overpay by a lot to sign UFAs.

Just to give an idea, someone who makes $400,000 a year means that he will have to pay $15,000 more taxes a year. Scale that for someone who makes 4M$. That's a significant amount!

shutehinside 09-24-2012 01:00 PM

It's moved up in Ontario as well to 50% for anyone making over $500k.

Other than that, the team will compensate in other ways to make up for it. Cottages, cars, use of private jets... You'd be surprised at how creative these guys can get to subvert the tax code.

I don't think it's that big a deal too be honest. It's not like they actually pay that high a rate to begin with.

Kriss E 09-24-2012 01:28 PM

Poor guys will just have to make an effort and try to live off their other millions. Should be a real struggle for them.

WhiskeySeven 09-24-2012 01:47 PM

Jesus Christ, Quebec really hates success.

This isn't like the states where the rich pay unfathomably low taxes, the proposed 55% rate is a ludicrously high amount and 130k is definitely not all that much if you have a spouse and two dependents. Why would a small-to-medium sized business owner WANT to stay here with its language laws (that are getting even stricter) and a tax code that wants more than half of his low-six-figure salary + the ultra-high PST + the rampant corruption and province-wide wastefulness? Can someone justify making Quebec seem even less attractive as an investment opportunity?

When are they announcing the revised tax code? Might be time to divest from this province.

edit: totally misread the post and was totally misinformed, I'll leave my post up in it's full ignorant glory as the town dunce. My sincerest apologies.

Jakomyte 09-24-2012 02:05 PM

Quote:

Originally Posted by WhiskeySeven (Post 54556429)
Jesus Christ, Quebec really hates success.

This isn't like the states where the rich pay unfathomably low taxes, the proposed 55% rate is a ludicrously high amount and 130k is definitely not all that much if you have a spouse and two dependents. Why would a small-to-medium sized business owner WANT to stay here with its language laws (that are getting even stricter) and a tax code that wants more than half of his low-six-figure salary + the ultra-high PST + the rampant corruption and province-wide wastefulness? Can someone justify making Quebec seem even less attractive as an investment opportunity?

When are they announcing the revised tax code? Might be time to divest from this province.

1) You think its a good thing that rich people pay less taxes than the middle class/lower income people?

2) I don't think people would be paying more than half of their income in taxes, as I'm fairly sure that the 55% rate would apply to the income earned in excess of $130K (see marginal vs average tax rate: http://retirehappyblog.ca/marginal-tax-vs-average-tax/).

Blind Gardien 09-24-2012 02:07 PM

Well, they were not allowed to add any other perks in the last CBA. But maybe if Molson lobbies for it, there could be a provision for local tax rates to somehow factor into the cap equation.

I guess it just depends on the disparities across the league... how many other teams perceive themselves to be disadvantaged and relative to who... if it's just a couple "rich" teams in Toronto and Montreal, and most of the US teams are relatively even, good luck getting the advantaged majority to vote any breaks in. (I have no idea what the rates are across the league).

Habs do have to find incentives to attract players, for sure. Winning is usually a good one. But you have to get the players first to do it. Habs probably have slightly better supplemental marketing/endorsement opportunities for players than in many cities. But not sure players really factor such unquantifiable things into a contract negotiation. Treating the players with "class" (not skimping on jerseys or cookies on a plane or whatever) would obviously help. Maybe you could really up the "class" factor as a company policy without necessarily having explicit "perks". I guess that depends to some extent on how explicitly the CBA monitors expenses on hotels, chauffeurs, meals, etc. But even without giving the players 5-stars all the way if the CBA prevents it, you can still up the "class" factor, probably. :dunno:

Et le But 09-24-2012 02:10 PM

Quote:

Originally Posted by Kriss E (Post 54556019)
Poor guys will just have to make an effort and try to live off their other millions. Should be a real struggle for them.

Of course it's absurd for multimillionaires to worry about this, especially when the cost of living in Montreal is lower than a lot of other cities, but when you have states in the American south with no state tax or an absurdly low state tax, it means more money to players (and their agents) and will hurt the Habs on the free agent market.

While I'd like to think guys who will be well off either way will factor other things into account, it will be a factor in free agency.

Roulin 09-24-2012 02:12 PM

Quote:

Originally Posted by Captain Saku (Post 54555283)
First of, let me be clear, this is by no mean meant to be a political debate. For those who don't know, new taxes increase are to be announced to those who make more than 130,000$ a year going from 48% to 55% rate.

I would like to discuss on a pure hockey operation, what do you think the impact would be on the habs for keeping their own players and attracting UFAs? It's getting a bit unfair honestly. We will have to overpay by a lot to sign UFAs.

Just to give an idea, someone who makes $400,000 a year means that he will have to pay $15,000 more taxes a year. Scale that for someone who makes 4M$. That's a significant amount!

I think it might be to the Habs' advantage to try to retain their own NHL'ers more than they've done recently, and bring in less outside UFA's. It tends to cost less. Once players are here, they generally want to stay, regardless of the tax situation.

I know it's easier said than done, but making the extra effort to retain future versions of Grabovsky, Sergei, Andrei, Kostopoulos, Moore, Tanguay rather than letting them go and pursuing similar talents on the free agent market... IMO would result in a more cost efficient, therefore better, team. Draft, develop, retain.

shutehinside 09-24-2012 02:24 PM

Quote:

Originally Posted by Jakomyte (Post 54556829)
1) You think its a good thing that rich people pay less taxes than the middle class/lower income people?

2) I don't think people would be paying more than half of their income in taxes, as I'm fairly sure that the 55% rate would apply to the income earned in excess of $130K (see marginal vs average tax rate: http://retirehappyblog.ca/marginal-tax-vs-average-tax/).

The average NHL salary is $2,400,000. If you deduct $130,000 from that you're still at $2,227,000 taxed at 55% leaves you with less than $1,000,000. You're literally paying more in taxes than your taking home.

I don't care how much you make, that SUCKS!

No one is saying not to pay taxes, but they're being asked to pay MORE than the average person on a percentage which also makes them pay a much larger dollar amount as well. It's not as simple as giving a percentage which is the same or more as everyone else, they pay WAAAAAAAY more in taxes then the average person, even at a fraction of the average rate. Simply saying "do you think it's a good thing that rich people pay less taxes than the middle/lower income people" makes no sense what so ever. The average Canadian pays 20% in income tax per year (http://www.statcan.gc.ca/dai-quo/a-d...tidien-eng.htm) The Quebec government is now asking the wealthiest, highest grossing tax payers to pay nearly 3 times the average amount! THREE TIMES! That's insane. Add to that that Quebec is one of the poorest provinces and you can see why they're in such terrible shape as a province.

Simply put, like it or not, wealthy people are actually good for an economy. Disenchanting them and giving them reason not to work or do business in Quebec only works against the province and its people. There's a reason why Toronto has flourished once the exodus of business' drove down the highway since the late 70's while Montreal is shrivelling as a city. It's actually really sad. Sadder still is that politicians believe higher taxes are a solution rather than the problem. I'm glad I don't live there anymore and make way more money and pay less taxes then I would had I stayed. I also spend a lot more money, just not in Quebec.

The Russian General 09-24-2012 02:33 PM

Quote:

Originally Posted by Et le But (Post 54556917)
Of course it's absurd for multimillionaires to worry about this, especially when the cost of living in Montreal is lower than a lot of other cities, but when you have states in the American south with no state tax or an absurdly low state tax, it means more money to players (and their agents) and will hurt the Habs on the free agent market.

While I'd like to think guys who will be well off either way will factor other things into account, it will be a factor in free agency.

Yeah but the teams from the South are mostly poor or in weak financial state. It doesn't change much really. How many southern teams won the cup in the last 15 years? Dallas, Tampa, Carolina, Anaheim and Los Angeles. From these 5, you can remove the Californian teams as they're not part of what we consider the Southern US.

In the end, it doesn't matter as much as we think it does. The reason is we are able to pay more than most southern teams. Same for the Leafs.

walsy37 09-24-2012 02:34 PM

Quote:

Originally Posted by WhiskeySeven (Post 54556429)
Jesus Christ, Quebec really hates success.

This isn't like the states where the rich pay unfathomably low taxes, the proposed 55% rate is a ludicrously high amount and 130k is definitely not all that much if you have a spouse and two dependents. Why would a small-to-medium sized business owner WANT to stay here with its language laws (that are getting even stricter) and a tax code that wants more than half of his low-six-figure salary + the ultra-high PST + the rampant corruption and province-wide wastefulness? Can someone justify making Quebec seem even less attractive as an investment opportunity?

When are they announcing the revised tax code? Might be time to divest from this province.

Whiskey - no matter where you live people who actually pay taxes are always going to complain that it is too high and it discourages success. Look at south of the border where the two candidates are disputing that very issue. Entitlement societies dictate that someone needs to pay the bills and that will be the highest wage earners.

The real question and the point of the thread is what impact will this have on the Habs? I think it does have an impact. The Habs are too far away from the glory years for it to mean anything special to wear the CH unless you are from the area. They have not had a consistent winning culture for at least 15 years. So the question then is money and enjoyment of living in a city. Assuming the CN dollar remains near par value with the US dollar, the Habs will simply have to pay more so the players can make the same type of money. At the veteran minimum it is not such a big deal but at the 6+ players, the .25 - .5 million starts to add up and take up precious cap room. Throw in the craziness of playing in the pressure cooker in Montreal, the constant language debate (which really does grate on English speaking people) and it adds up to a less attractive place to play.
Anyone who says otherwise or insists that the players all want to play here in the Mecca of hockey is unfortunately sadly mistaken and not rooted in reality.

Jakomyte 09-24-2012 02:39 PM

Quote:

Originally Posted by shutehinside (Post 54557243)
The average NHL salary is $2,400,000. If you deduct $130,000 from that you're still at $2,227,000 taxed at 55% leaves you with less than $1,000,000. You're literally paying more in taxes than your taking home.

I don't care how much you make, that SUCKS!

No one is saying not to pay taxes, but they're being asked to pay MORE than the average person on a percentage which also makes them pay a much larger dollar amount as well. It's not as simple as giving a percentage which is the same or more as everyone else, they pay WAAAAAAAY more in taxes then the average person, even at a fraction of the average rate. Simply saying "do you think it's a good thing that rich people pay less taxes than the middle/lower income people" makes no sense what so ever. The average Canadian pays 20% in income tax per year (http://www.statcan.gc.ca/dai-quo/a-d...tidien-eng.htm) The Quebec government is now asking the wealthiest, highest grossing tax payers to pay nearly 3 times the average amount! THREE TIMES! That's insane. Add to that that Quebec is one of the poorest provinces and you can see why they're in such terrible shape as a province.

Simply put, like it or not, wealthy people are actually good for an economy. Disenchanting them and giving them reason not to work or do business in Quebec only works against the province and its people. There's a reason why Toronto has flourished once the exodus of business' drove down the highway since the late 70's while Montreal is shrivelling as a city. It's actually really sad. Sadder still is that politicians believe higher taxes are a solution rather than the problem. I'm glad I don't live there anymore and make way more money and pay less taxes then I would had I stayed. I also spend a lot more money, just not in Quebec.

First of all, I was responding to a poster claiming that a small business person making 'low six figures' would have to pay more than half his/her income in taxes, which isn't true. You are right in saying that those making millions of dollars a year in salary will be paying more than half of what they make in taxes, I never contested that.

The whole point of having a graduated tax system is that those that make more money pay a higher percentage of their taxes than those who make less. This is because the money being taxed at the higher rungs of the tax bracket is money that is in excess of a living wage. I'm not arguing that the money isn't being deserved by those making it (even though there is an argument to make here for some wealthy people), but if you tax these people less, you will either have to cut social services, or tax the rest of the population more. The third option is that wasteful government spending can be limited, but that should be the case regardless of the tax $$$ being brought in.

Whether or not this system is 'fair' can be argued, but the idea is that, as a society, those with more help provide support and opportunity to those with less. If the idea was just to maximize the amount of profit of the individual at the expense of helping out the less fortunate, then yes, lowering taxes on the wealthy would make sense.

I do favour the idea of those with more giving more back to the collective, as opposed to the mentality of 'every person for themselves', although there are limits. Maybe 55% is too high? It can be difficult to strike the right balance.

BLONG7 09-24-2012 02:46 PM

People who make a lot of money, always seem to find a good accountant...that being said, no wonder the Cdn teams have to overpay their free agents...:shakehead

uiCk 09-24-2012 02:47 PM

Less money oriented players to sign;
habs cannot rely on UFA's and have to rely on inner development of players.
Habs have to focus on developing a contender to bring in UFAs whos main priority is to win.

BaseballCoach 09-24-2012 03:10 PM

Quote:

Originally Posted by shutehinside (Post 54557243)
The average NHL salary is $2,400,000. If you deduct $130,000 from that you're still at $2,227,000 taxed at 55% leaves you with less than $1,000,000. You're literally paying more in taxes than your taking home.

I don't care how much you make, that SUCKS!

No one is saying not to pay taxes, but they're being asked to pay MORE than the average person on a percentage which also makes them pay a much larger dollar amount as well. It's not as simple as giving a percentage which is the same or more as everyone else, they pay WAAAAAAAY more in taxes then the average person, even at a fraction of the average rate. Simply saying "do you think it's a good thing that rich people pay less taxes than the middle/lower income people" makes no sense what so ever. The average Canadian pays 20% in income tax per year (http://www.statcan.gc.ca/dai-quo/a-d...tidien-eng.htm) The Quebec government is now asking the wealthiest, highest grossing tax payers to pay nearly 3 times the average amount! THREE TIMES! That's insane. Add to that that Quebec is one of the poorest provinces and you can see why they're in such terrible shape as a province.

Simply put, like it or not, wealthy people are actually good for an economy. Disenchanting them and giving them reason not to work or do business in Quebec only works against the province and its people. There's a reason why Toronto has flourished once the exodus of business' drove down the highway since the late 70's while Montreal is shrivelling as a city. It's actually really sad. Sadder still is that politicians believe higher taxes are a solution rather than the problem. I'm glad I don't live there anymore and make way more money and pay less taxes then I would had I stayed. I also spend a lot more money, just not in Quebec.

With athletes, the situation is even worse, because they have a limited number of high income earning years. Ask the retired guys how much they earn now?

FlyingKostitsyn 09-24-2012 03:42 PM

Quote:

Originally Posted by uiCk (Post 54557693)
Less money oriented players to sign;
habs cannot rely on UFA's and have to rely on inner development of players.
Habs have to focus on developing a contender to bring in UFAs whos main priority is to win.

All players are somewhat money oriented. Some are more, but who cares if they are good and make you win?

The Habs are a high spending team, they have to use the UFA market. Its a necessary tool to build a successful team because you severely hamper your chances of success if you rely only on drafting and even less on trades, UFAs are ''free'' good and proven ''ready to use'' talent. Cup winning teams have UFAs on them, sometimes very expensive ones even if they benefitted from great drafting. Some teams draft well but never get out of the basement because they never acquire these high level talents.

Habs were already penalized by the taxation level and now its even worse. We'll need to overpay a bit more than before. Can't blame players if they turn us down because they can earn a few more 100k$ aftertax elsewere. A nice ''little'' extra they can invest, spend on luxuries or share with their families. With can be sure now that none of that will be spent here if they don't have that money or don't sign here at all. In the end, Quebec's poorer for all of it.

''Pauvre en riche mais riche en pauvres''

Captain Smurf 09-24-2012 03:47 PM

Quote:

Originally Posted by shutehinside (Post 54555433)
It's moved up in Ontario as well to 50% for anyone making over $500k.

Other than that, the team will compensate in other ways to make up for it. Cottages, cars, use of private jets... You'd be surprised at how creative these guys can get to subvert the tax code.

I don't think it's that big a deal too be honest. It's not like they actually pay that high a rate to begin with.

You also have to take into account loopholes that exist in the tax code. Tax Lawyers specialize in finding loopholes faster than the IRS can.

The primary problem in raising taxes on the wealthiest is that they can generally decide how much they're willing to pay. If the cost benefits of paying a lawyer to find workarounds outweigh a perceived overcharge of taxes then they will take it. Its the primary problem with only raising taxes on the wealthy.

TLDNR; There are ways to deal with higher taxes for players and the Habs can make use of them. It certainly wont encourage UFA's to sign, but it likely wont impede them more than they already are.

Kriss E 09-24-2012 03:47 PM

Quote:

Originally Posted by BaseballCoach (Post 54558119)
With athletes, the situation is even worse, because they have a limited number of high income earning years. Ask the retired guys how much they earn now?

You mean ask the millionaires that had the chance to live out their dream job, make millions, and get to retire when the average other person has to work 20 extra years??
I'm sure they struggle really bad...

The more money you have, the easier it is to make some.

FlyingKostitsyn 09-24-2012 03:55 PM

Quote:

Originally Posted by Kriss E (Post 54558855)
You mean ask the millionaires that had the chance to live out their dream job, make millions, and get to retire when the average other person has to work 20 extra years??
I'm sure they struggle really bad...

The more money you have, the easier it is to make some.

...and thats exactly why signing long term in a high tax area can represent enormous amount of money over decades if they money is invested.

Quote:

Originally Posted by Captain Smurf
You also have to take into account loopholes that exist in the tax code. Tax Lawyers specialize in finding loopholes faster than the IRS can.

The primary problem in raising taxes on the wealthiest is that they can generally decide how much they're willing to pay. If the cost benefits of paying a lawyer to find workarounds outweigh a perceived overcharge of taxes then they will take it. Its the primary problem with only raising taxes on the wealthy.

TLDNR; There are ways to deal with higher taxes for players and the Habs can make use of them. It certainly wont encourage UFA's to sign, but it likely wont impede them more than they already are.

True enough. Those that are worse off in this situation aren't the extremely rich but rather the upper middle class. Sadly in Quebec perception is a bit wierd, the average joe appears to consider anyone making more than 50k$ to be ''rich'' so anyone making more than 130k$ will appear to be some kind of multinational owning filthy capitalist.

Whitesnake 09-24-2012 05:44 PM

Salary cap should be adjusted depending on the taxes players needs to pay. Isn't the cap supposed to be fair for everyone? How fair is that for us?

Agnostic 09-24-2012 06:41 PM

Quote:

Originally Posted by shutehinside (Post 54555433)
It's moved up in Ontario as well to 50% for anyone making over $500k.

Other than that, the team will compensate in other ways to make up for it. Cottages, cars, use of private jets... You'd be surprised at how creative these guys can get to subvert the tax code.
I don't think it's that big a deal too be honest. It's not like they actually pay that high a rate to begin with.

There was a "perk" crackdown under the current CBA everything given to the player is counted as compensation, counted towards the cap, and taxed. Free tickets, cottages, free travel, perks of all sorts are a things of the past as to prevent costly cap violations.

Captain Smurf 09-24-2012 07:25 PM

Quote:

Originally Posted by Blind Gardien (Post 54556857)
Well, they were not allowed to add any other perks in the last CBA. But maybe if Molson lobbies for it, there could be a provision for local tax rates to somehow factor into the cap equation.

I guess it just depends on the disparities across the league... how many other teams perceive themselves to be disadvantaged and relative to who... if it's just a couple "rich" teams in Toronto and Montreal, and most of the US teams are relatively even, good luck getting the advantaged majority to vote any breaks in. (I have no idea what the rates are across the league).

Habs do have to find incentives to attract players, for sure. Winning is usually a good one. But you have to get the players first to do it. Habs probably have slightly better supplemental marketing/endorsement opportunities for players than in many cities. But not sure players really factor such unquantifiable things into a contract negotiation. Treating the players with "class" (not skimping on jerseys or cookies on a plane or whatever) would obviously help. Maybe you could really up the "class" factor as a company policy without necessarily having explicit "perks". I guess that depends to some extent on how explicitly the CBA monitors expenses on hotels, chauffeurs, meals, etc. But even without giving the players 5-stars all the way if the CBA prevents it, you can still up the "class" factor, probably. :dunno:

FP actually did a solid breakdown of this.

http://business.financialpost.com/20...ly-tax-havens/

Its interesting that the 3 richest teams (TOR, NYR, and MTL according to http://www.forbes.com/nhl-valuations/list/#p_1_s_d2_) are all in the top 5 highest tax brackets in the league. Other powerful big market teams like VAN and BOS also have high tax rates. I tend to think that modifying the Cap with regards to taxes may help sell revenue sharing to the big market teams.

plafleur10 09-24-2012 07:35 PM

Provincial taxes are based on residence, ie where a person has his main residence, bank accounts, family, etc.

For instance, as long as they do not take up Quebec residence and maintain their main residence in their home province, while only renting a temp apartment in Montreal, Canadian players like Gorges or Price pay BC taxes, Prust will pay Ontario taxes, etc.

Ironically, Quebec players get the shaft if they play for the Habs as they are likely residents of Quebec.

I also believe non canadian players (such as americans)pay the high Quebec taxes at least on the 50% of their income earned in Quebec as they would be deducted at source on that income.

I believe this is how it works. Habs might be compelled to draft extensively in the OHL and WHL in the future!

All this may be academic, as the PLQ and CAQ intend to block the increase.

NewHabsEra* 09-24-2012 07:50 PM

Bottom lines players are easy to find and it wont affect players making multi millions much..

Beatnik 09-24-2012 08:02 PM

Quote:

Originally Posted by plafleur10 (Post 54563613)
Provincial taxes are based on residence, ie where a person has his main residence, bank accounts, family, etc.

For instance, as long as they do not take up Quebec residence and maintain their main residence in their home province, while only renting a temp apartment in Montreal, Canadian players like Gorges or Price pay BC taxes, Prust will pay Ontario taxes, etc.


''Honey I will sign a contract with the Habs! You'll have to go live in Prince George with the kids though, because I want to save on taxes!''


I don't think that will work out :)



Right now a player signing in Montreal makes 10-20% less than in most other cities. After the new laws it will be another 3.5% less.


I think a good percentage of players follow the money when they are UFAs so it does hurts us.


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