How to Calculate Luxury Tax Bill (i.e. GS 2015-16 Non-Repeater)

[jaywalkszzz]

Just curious how the league, Eric Pincus, Larry Coon, and Bobby Marks got a $14.8 Million Luxury Tax Bill for the 2015-16 Warriors.

I understand how the tax bill is calculated as Larry Coon describes in

http://www.basketballinsiders.com/chat/nba-chat-with-larry-coon-7282016/

"First, the team salary for tax purposes is adjusted from the actual team salaries. So the amount the use for tax purposes is not exactly the team salary amount — it may be lower or higher.

Second, each $5 million increment is taxed at its own rate. The first $5 million is taxed at $1.50 per dollar, so the team pays a total of $7.5 million for its first $5 million over the tax line. It cam pay a maximum of $8.75 million for its second $5 million over the tax line. So by paying $14.8 million in tax, it means the Warriors paid $7.5 million (in the first band) plus $7.3 million (in the second band). Since the second band is taxed at $1.75 per dollar, that means they were about $4.2 million into the second band, so their team salary for tax purposes was actually $9.2 million over the tax line."

I have the 2015-16 Warriors Team Salary $9,016,211 over the luxury tax line for Tax Purposes NOT the $9.2 million referenced by Larry Coon. Thus, a Tax Bill of only $14,528,369. What am I missing?
https://docs.google.com/spreadsheets/d/1HqlXlwht1rWRFldGSGBYNjL4pdZsVz0gVsKW83d02D4/edit?usp=sharing

[jaywalkszzz]

Nevermind, figured it out w/ Eric's help & Spotrac's data:

https://docs.google.com/spreadsheets/d/1HqlXlwht1rWRFldGSGBYNjL4pdZsVz0gVsKW83d02D4/edit?usp=sharing

It's crazy to see Draymond's technicals/suspensions totaled to $208,644 in 2015-16.

[Smitty731]

Nevermind, figured it out w/ Eric's help & Spotrac's data:

https://docs.google.com/spreadsheets/d/1HqlXlwht1rWRFldGSGBYNjL4pdZsVz0gVsKW83d02D4/edit?usp=sharing

It's crazy to see Draymond's technicals/suspensions totaled to $208,644 in 2015-16.

Yeah the suspensions/fines are the tricky part for sure. Can be a bit of a bear to track. I generally don't bother since it is in the ballpark anyway. And nothing is more bothersome than getting it set and then a day/week later the league rescinds it and you need to reset!

Also, did you catch the part about how undrafted players making less than the 2 year minimum count as the 2 year minimum for the tax? And that is fun to do when they aren't in the league for the full year and you need to figure the pro-rated amount!

[jaywalkszzz]

Nevermind, figured it out w/ Eric's help & Spotrac's data:

https://docs.google.com/spreadsheets/d/1HqlXlwht1rWRFldGSGBYNjL4pdZsVz0gVsKW83d02D4/edit?usp=sharing

It's crazy to see Draymond's technicals/suspensions totaled to $208,644 in 2015-16.

Yeah the suspensions/fines are the tricky part for sure. Can be a bit of a bear to track. I generally don't bother since it is in the ballpark anyway. And nothing is more bothersome than getting it set and then a day/week later the league rescinds it and you need to reset!

Also, did you catch the part about how undrafted players making less than the 2 year minimum count as the 2 year minimum for the tax? And that is fun to do when they aren't in the league for the full year and you need to figure the pro-rated amount!

Yea McAdoo was making less than the 2 year minimum so I counted him as the 2 year minimum for tax purposes (He was making the 1 year minimum).

Also, Bogut's Tax salary was at 12 Million because he missed earning his 15% bonus (i.e. All-Defensive Team)

Varejao's was tricky: a "rest-of-season" contract where the reimbursement threshold (2 year minimum) was pro-rated itself. Spotrac already pro-rated it to I believe 52 days of the 2 year minimum.

I also believe there wasn't a "set-off" calculation in Jason Thompson's amount because when he signed with Toronto, he signed for less than the 1 year minimum.

My accounting error was with Brandon Rush's 2015-16 Tax Salary (credit to Eric Pincus). Even though Rush was a minimum salary (7 year scale) player, his salary minus the 2 year veteran minimum was NOT reimbursed by the league. Rush's minimum salary (7 year scale) was fully paid by the Warriors. The reason is that Rush was on a multi-year minimum contract (from 2014-16). Had Rush been on a single-year minimum contract in 2015-16, the league would have reimbursed his salary amount above the two-year veteran minimum. The two-year veteran minimum salary amount would have been the only portion of Rush's salary that would have been "luxury taxed". In reality, Rush's full minimum salary (7 year scale) was "luxury taxed" for the 2015-16 season.

Accounting all this just shows the salary cap geek in me. It was also surprisingly interesting to look up fine/suspension histories and finding the cost of a thrown mouth piece and groin kicks between Livingston vs. Dirk (irrelevant in calculation though since it occurred in 2014-15 season).

[DBoys]

I'm impressed by the accounting detail being done from afar by those with limited info to work with, and it's interesting to observe what changes what. But with no disrespect intended, I have to assume (just as a practical concept) that the way all of the various record-keepers landed at the same $14.8M number was because the NBA announced the number, and everyone said "Okay, that was the tax amount" and wrote it down (rather than having tracked the pending tax ramifications of every sneeze and hiccup for 30 teams day by day).

Did anyone actually try to keep track daily? Or, later on, reverse engineer each number? Other than as a one-time exercise in understanding how the calculations may be done, it seems to me that whether some billionaire pays $13.1M or $14.2M or some other number in tax has no importance to anyone other than the NBA's accountants and the owner who writes a check, and the curiosity of accuracy, as the minor difference won't impact anything that teams do or are allowed to do.

Maybe I'm just too lazy for this amount of detail. I let the NBA's accountants figure it out, announce it, and then I just record what they come up with.

[Smitty731]

I'm impressed by the accounting detail being done from afar by those with limited info to work with, and it's interesting to observe what changes what. But with no disrespect intended, I have to assume (just as a practical concept) that the way all of the various record-keepers landed at the same $14.8M number was because the NBA announced the number, and everyone said "Okay, that was the tax amount" and wrote it down (rather than having tracked the pending tax ramifications of every sneeze and hiccup for 30 teams day by day).

Did anyone actually try to keep track daily? Or, later on, reverse engineer each number? Other than as a one-time exercise in understanding how the calculations may be done, it seems to me that whether some billionaire pays $13.1M or $14.2M or some other number in tax has no importance to anyone other than the NBA's accountants and the owner who writes a check, and the curiosity of accuracy, as the minor difference won't impact anything that teams do or are allowed to do.

Maybe I'm just too lazy for this amount of detail. I let the NBA's accountants figure it out, announce it, and then I just record what they come up with.

The only time I even bother keeping track is if a team is really close to avoiding the tax entirely. Or if it matters for triggering the hard cap. Beyond that, it just isn't worth it. Too much changes too often to make it an effort worth undertaking.