The varying tax rates of different states and provinces hosting NHL teams can have an effect on attracting players, according to a new study that found Montreal and Calgary at opposite ends of the spectrum with the highest and lowest rates.
The joint study by the Canadian Taxpayers Federation and Americans for Tax Reform found that of the 30-team roster, 2013-14 players for the Montreal Canadiens paid the highest tax rate of around 54 per cent. Meanwhile, players on the Calgary Flames paid around 38 per cent (with Edmonton Oilers coming in at a close second.)
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For example, a player like P.A. Parenteau, who was traded to the Canadiens this year by the Colorado Avalanche, will have to pay an additional $349,535 in taxes, having left Colorado's 46 per cent tax rate.
However, Benoit Pouliot's deal earlier this year to move from the New York Rangers to the Oilers will save him $575,752 in taxes.
"Take a break from blaming your team’s management and consider blaming high taxes for why your team can’t seem to end that rut," the report said.
Mind you, the report notes that the tax advantage doesn’t seem to have been particularly helpful for Calgary and Edmonton, while Montreal seems to be surviving nicely.
The study also found that the tax rate affected salary caps. Last season, teams could all spend up to $64.2
million before tax. This means the true cap, or after tax cap, of the Calgary Flames and Edmonton Oilers was a league high $39.6 million. But the Montreal Canadiens' true cap was a league low of only $29.6 million.
Aaron Wudrick, director of the Canadian Tax Federation, said that 57 per cent of NHL free agents choose to sign with teams that have lower tax rates.
"Injuries can damage your favourite sports team. So can high taxes in your state. Higher taxes drive talent to other teams in lower tax states and provinces," said Grover Norquist, president of Americans for Tax Reform. "High taxes and pulled tendons can both keep you out of the playoffs."