Question about Taxing of NBA players in Toronto
Old 06-18-2014, 11:51 AM   #1 (permalink)
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Lightbulb Question about Taxing of NBA players in Toronto

I am kind of a newb when it comes to this, I just want to know how much an nba player in the Raptors gets taxed as an international in canada (w/ a work permit) and also paying taxes as an American. (this was spoken a bit in the Lowry thread) I feel like this greatly factors in a FA's choice of moving/staying in canada.

Cause ultimately as far as I know, I feel like NBA players in the Raptors unless they are international/rookies will rather choose to go to certain areas in the U.S. because it benefits them on the revenue end.


Quote:
Originally Posted by bankrate
Canada's top tax rate of 48 percent is 13 percent higher than the U.S. maximum (35 percent), and Canada taxes individuals based on their residency while the U.S. taxes people based on citizenship.

"As a result, it's advantageous for Canadian players to move to the U.S.," says Losi. "That's what a lot of the NHL guys do. As long as you don't have Canadian-source income, you don't pay Canadian tax, you save 13 percent on every dollar, plus there are a lot more deductions and credits in the U.S."

While the reverse is often true for U.S. players signed to Canadian teams,

Read more: Taxes: Cost Of Being A Professional Athlete | Bankrate.com
After reading another article it says differentlyactually beneficial for U.S. players in a different sense.

Quote:
Originally Posted by crowsoberman
Ignoring contract restructuring and using all the variables described above, we computed that the tax bill for a player who is a resident of Florida and moves from the Marlins to the Blue Jays with $100 million left on his contract is only an additional $2.7 million, over the life of the entire contract. It is a significant number, but it is far lower than the $14.5 million some sports reporters would have us believe.

For comparative purposes, if that same player was traded to a team in California, instead of Canada, he would actually be worse off financially! In that case, he would pay an additional $3.5 million in taxes. A move to a team in New York State (where tax rates are similar to Toronto) would cost the player an additional $2.5 million in taxes - assuming that player does not want to live in a swanky Manhattan condo, where city taxes would cost him a further $1.7 million.

The bottom line is that it is time to eliminate taxes as a potential reason for athletes staying away from Canada. Baseball players should focus on factors other than taxes when deciding to play here: a beautiful and lively city with fine restaurants and nightlife, and playing meaningful baseball games all summer long in a stadium packed with the best fans in baseball. Those things will help curb any costs.
| Crowe Soberman
Florida and other non-taxed states such as Texas are only a few examples where large tax discrepancies may exist when a player is traded to a Canadian team (which I believe is the problem - since those states happen to be where the most competitive teams come from). However, as illustrated above, the added tax costs for a player moving to the Blue Jays would be no different than if he moved to the Dodgers or the Mets.

What do you think?
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Old 06-18-2014, 12:04 PM   #2 (permalink)
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Florida and Texas are the exceptions. There are other states with no income tax but they don't have an NBA team. To make a long story short, yes it is a pretty nice incentive not to pay state income tax. Mind you places like California and New York have higher taxes. Never really looked in to it how much it really is vs. the Tax in Ontario.
Anyhow, not much we can do about it.
Also, take a look at this: Shaq Professes His Love For Toronto, Despite Its Tax Issues* - Business Insider
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Old 06-18-2014, 12:19 PM   #3 (permalink)
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Originally Posted by Tommy C View Post
Florida and Texas are the exceptions. There are other states with no income tax but they don't have an NBA team. To make a long story short, yes it is a pretty nice incentive not to pay state income tax. Mind you places like California and New York have higher taxes. Never really looked in to it how much it really is vs. the Tax in Ontario.
Anyhow, not much we can do about it.
Also, take a look at this: Shaq Professes His Love For Toronto, Despite Its Tax Issues* - Business Insider
good stuff on the shaq article

but if we talk about the lowry situation it benefits him more to just go to miami because of the incentive in lower taxes (just in a business perspective) that can be said with other teams in florida and texas. maybe he might go to houston..
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Old 06-18-2014, 12:42 PM   #4 (permalink)
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Originally Posted by gustavochinzy View Post
good stuff on the shaq article

but if we talk about the lowry situation it benefits him more to just go to miami because of the incentive in lower taxes (just in a business perspective) that can be said with other teams in florida and texas. maybe he might go to houston..
The short answer is yes. If he goes to TX or FL since there is no state income tax he will be paying only the federal tax, social security etc... which means that he can accept a lower offer but his net income won't take a hit. Mind you this is true to any player and the discussion has been around for years.
Just a few examples:
New York income tax: (top rate): 8.82%
California (top rate): 13.3%
Colorado (flat rate): 4.63%
Pennsylvania (flat rate): 3.07%
Illinois (flat rate): 5%
Massachusetts: (flat rate): 5.2%

Players (and anyone else really) is being taxed for federal income tax, social security tax and Medicare tax but this amount is far less than the tax burden in Ontario. Maybe now we can see why we often need to overpay players to come here.
Imo it's not that players don't want to come to Toronto because it's Canada, the weather etc... I am more inclined to think that it's the money out of the pocket that they need to pay.

Last edited by Tommy C; 06-18-2014 at 12:45 PM.
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Old 06-18-2014, 12:54 PM   #5 (permalink)
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Quote:
Originally Posted by Tommy C View Post
The short answer is yes. If he goes to TX or FL since there is no state income tax he will be paying only the federal tax, social security etc... which means that he can accept a lower offer but his net income won't take a hit. Mind you this is true to any player and the discussion has been around for years.
Just a few examples:
New York income tax: (top rate): 8.82%
California (top rate): 13.3%
Colorado (flat rate): 4.63%
Pennsylvania (flat rate): 3.07%
Illinois (flat rate): 5%
Massachusetts: (flat rate): 5.2%

Players (and anyone else really) is being taxed for federal income tax, social security tax and Medicare tax but this amount is far less than the tax burden in Ontario. Maybe now we can see why we often need to overpay players to come here.
Imo it's not that players don't want to come to Toronto because it's Canada, the weather etc... I am more inclined to think that it's the money out of the pocket that they need to pay.
Definitely agreed. sucks but I guess that is the reality Raptors have to play as.
So is it more beneficial for the team just to draft players like vince Carter for the hopes to contend the nba championship rather than hope for a free agent landing here?
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Old 06-18-2014, 12:57 PM   #6 (permalink)
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Originally Posted by gustavochinzy View Post
Couldn't agree anymore, sucks but I guess that is the reality Raptors have to play as.
So is it more beneficial for the team just to draft players like vince Carter for the hopes to contend the nba championship rather than hope for a free agent landing here?
No, we delberately draft players that can't be like Carter.
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Old 06-18-2014, 01:01 PM   #7 (permalink)
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I really don't think Lowry will base his decision purely on financial factors. As long as he gets good money here and knows he can be a part of this team even beyond his playing career, then there is not a lot that can be offered elsewhere. Playing on a top level team like the Heat could change that, but it would require the heat to go through a lot of unlikely hoops. Still, it won't be about money in that situation.

His agent stressed how much he values loyalty and being secure within the framework of a team. He has solid relationships here. He just needs to get a nice offer and know that what happened last season was just the beginning of something really good.
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Old 06-18-2014, 01:04 PM   #8 (permalink)
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Originally Posted by gustavochinzy View Post
Definitely agreed. sucks but I guess that is the reality Raptors have to play as.
So is it more beneficial for the team just to draft players like vince Carter for the hopes to contend the nba championship rather than hope for a free agent landing here?
THIS is one of the main reasons there is a heated debate with posters advocating the team to either:

a) attempt to acquire assets (or even retain them) to enhance the current roster

as opposed to:

b) a rebuild through the draft knowing that getting a marquis FA to come to TO has been next to impossible - let alone retain them (Vince you mention, but there was also McGrady, Camby, Stoudamire, Bosh)
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Old 06-18-2014, 01:10 PM   #9 (permalink)
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Originally Posted by DocHoliday99 View Post
THIS is one of the main reasons there is a heated debate with posters advocating the team to either:

a) attempt to acquire assets (or even retain them) to enhance the current roster

as opposed to:

b) a rebuild through the draft knowing that getting a marquis FA to come to TO has been next to impossible - let alone retain them (Vince you mention, but there was also McGrady, Camby, Stoudamire, Bosh)
Camby was traded. Stoudamire was unhappy with the organisation after Isiah was squeezed out. Altogether the franchise simply has not shown that it is worthy of much respect over the course of it's history. The ownership has been very questionable up to last year. I think looking through the lens of the past will not offer a very clear idea of what this team needs to do. Masai is correct in saying that they need to stop thinking players will not want to come here. If they build a strong organisation from top to bottom and show that ownership will do what it takes to get results, then the difference between the past and the future will be like night and day.
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Old 06-18-2014, 01:24 PM   #10 (permalink)
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Quote:
Originally Posted by LX View Post
Camby was traded. Stoudamire was unhappy with the organisation after Isiah was squeezed out. Altogether the franchise simply has not shown that it is worthy of much respect over the course of it's history. The ownership has been very questionable up to last year. I think looking through the lens of the past will not offer a very clear idea of what this team needs to do. Masai is correct in saying that they need to stop thinking players will not want to come here. If they build a strong organisation from top to bottom and show that ownership will do what it takes to get results, then the difference between the past and the future will be like night and day.
This is why I'm glad we have Masai, I feel like he is prioritizing rebuilding the organization from the get go rather than just get players temporarily for the short run. which I believe is another factor that makes a player decide wether he wants to go to one team or the other. Raptors are relatively a new franchise I guess time will tell in the long run.

trust in masai
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Old 06-18-2014, 01:52 PM   #11 (permalink)
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Originally Posted by LX View Post
Camby was traded. Stoudamire was unhappy with the organisation after Isiah was squeezed out. Altogether the franchise simply has not shown that it is worthy of much respect over the course of it's history. The ownership has been very questionable up to last year. I think looking through the lens of the past will not offer a very clear idea of what this team needs to do. Masai is correct in saying that they need to stop thinking players will not want to come here. If they build a strong organisation from top to bottom and show that ownership will do what it takes to get results, then the difference between the past and the future will be like night and day.
of course...like flipping a switch
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Old 06-18-2014, 02:24 PM   #12 (permalink)
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No idea why they make a big deal of the taxes anyway when a single NBA contract can basically set someone up for a lifetime.
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Old 06-18-2014, 03:41 PM   #13 (permalink)
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Quote:
Originally Posted by gustavochinzy View Post
This is why I'm glad we have Masai, I feel like he is prioritizing rebuilding the organization from the get go rather than just get players temporarily for the short run. which I believe is another factor that makes a player decide wether he wants to go to one team or the other. Raptors are relatively a new franchise I guess time will tell in the long run.

trust in masai
Quote:
Originally Posted by DocHoliday99 View Post
of course...like flipping a switch
I really think it goes way beyond Masai. When you have owners look at the finances very conservatively and require decisions to be made by a board that does not have a great basketball acumen or desire to win over selling enough seats to be profitable, then it is going to take a lot of luck to not have that reflected on the court. Even with luck there will be a small window before it is messed up. As soon as that changed, the switch was flipped.
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