At CSN Philly, Tim Panaccio writes that a luxury tax may be the only way to go for the NHL as they work on creating a new collective bargaining agreement.
Major League Baseball and the NBA both have luxury taxes and Panaccio writes “Baseball’s luxury tax is graduated, depending how many times a team exceeds the threshold — set at $178 million this season. That tax can be as high as 40 percent this year.”
In baseball, being over the luxury tax once means being taxed 22.5% the amount they are over, 30% the second time and 40% the third time.
In basketball, via The Basketball Jones, “The idea of a luxury tax to rein in excessive NBA spending was proposed during the extended 1998-99 NBA lockout. Players wanted to retain “Bird Rights,” which allowed teams to go over the salary cap to re-sign players. With no real hard cap in place, the NBA responded by bargaining in a second soft cap of sorts with a luxury tax — a dollar for dollar penalty that would be distributed amongst all non-tax-paying teams at the end of the season, only if the NBA met certain income requirements. It was first instituted in 2000-01, though the NBA didn’t meet those requirements, and the tax wasn’t collected that year or in 2004-05.”
The Knicks have paid over $195 million in luxury tax fees since it was instituted.