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Taxes in Sports

Parker 1st MRB

By Parker 1st MRB
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Parker 1st MRB Presidential Poster

Parker 1st MRB

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The Toronto Blue Jays just acquired Josh Johnson (owed $13.75 next year), Jose Reyes (owed $92 million through 2017) and Mark Buehrle (owed $51 million through '15) from the Miami Marlins in a megadeal trade that sent salaries up to $160 mil to the Blue Jays. Let's talk about taxes in sports because some people are making Canadian taxes out to be this ridiculous monster for sports players coming to play in Canada. At first glance, it does indeed look really bad, as in Florida players are subject to only the 35 per cent federal tax rate and no state tax, while in Ontario (the province I live in), the combination of federal and provincial taxes for income earners above $500,000 in 2013 will be 49.53 per cent. But once the factors of how the government's take of a person's income is calculated, what appears to be a 14.5 per cent hike more likely lands at 5-7 percent.

Canada taxes is based on residency, meaning that provided players make their homes outside the country (which they do), only half their income is taxed at Canadian rates since only half their work is conducted here. Then consider that in the United States, players pay a variable rate of state tax based on how many games they play in different locales, with New York, California and Michigan, for instance, charging a much higher rate than say Florida or Texas, which charge none. They also pay based on the rate of the state they live in. That's why the adjusted hit more likely sits in the 5-7 percent range.

As for what it means for the Blue Jays' new trio, using the 7 percent adjustment, Reyes will pay an additional $3.22 million over the life of his contract, Buehrle $1.785 million more, and Johnson another $480,000. Nobody would be happy about such a hike (let's be honest, it sucks for them because they are getting a cut) but it's not the bank-breaking blow some are making it out to be.

Parker 1st MRB Presidential Poster

Parker 1st MRB

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Well with the history you guys have I would be cautious as well.

The last big trade we did was in '92 when we got Joe Carter and Roberto Alomar which led to us winning back-to-back World Series in '92 and '93!

Of course, being a Toronto sports fan I'm always cautiously optimistic but sometimes it feels good when your organization does something awesome like this. Live in the moment!

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