Making lux tax more of a deterrent?

[coolness]

Two ideas about it.
1. Do you like?
2. Realistic?

(I don't remember ever hearing the 2nd idea, so if it is already out there, lemme know por favor.)

Just say lux tax is $80 million in the next CBA. Roll with me...

1)Right now teams pay double salary on any dollar over $80 million, right?
Would it be good to pay 2.5x or 3x instead? Even if a team can afford the increase, the whole principle of paying that much extra might discourage them.

2)Right now every team under the lux gets a share in the lux tax revenue, right?
Instead of teams under $80 million getting a share, how about only teams under $75m or $70m?
(Teams with 13 or 14 man rosters would have adjustments for their empty roster spots. 750k?)

[killbuckner]

Teams currently play a 100% luxury tax. So they are taxed a dollar for every dollar they are over the tax.

I'd personally like to see a progressively increasing luxury tax. Where when I team is over the luxury tax for 1 season then it doesn't hurt badly. For a team with an unwanted salary that they are waiting to expire they could go ahead and add salary knowing the first season wouldn't be too bad.

But then every season the luxury tax would steadily increase. Say in year 1 it would be a 50% tax so you would pay just 50 cents for every dollar you are over the tax. Year 2 it would be a 100% tax. Year 3 if the team were still over it would go to a 133% tax. Year 4 would be a 166% tax and then so on. You could use the luxury tax to keep your core together but eventually it would collapse under its own weight. You can pick the schedule of how aggressively the luxury tax would increase based on adjusting the numbers. Eventually youw ould have to blow it up and get back under the tax for at least a season.

And this would give teams real incentive to trade players to teams below the tax just because of how much less money those other teams would have to pay to keep them.

[giberish]

I wouldn't want the luxury tax to just be increased to 200% or 300% in a simple way.

The progressive with time luxury tax (as killbuckner described) is one option. You'd also have to decide if one year under the tax is enough for a reset, or if two or three are necessary.

The other option (which could even be combined with the first) would be a progressive with payroll luxury tax. Start with the current 100% tax at some line, then at and extra $10M make it 200%.

In general, running a few million over the tax one year because a bad contract didn't expire before a young player needed a raise shouldn't be that big of a deal, but running $20M over the tax year after year should be hugely expensive.

[killbuckner]

Right- you can play with the level of increases and the level of decreases however you like. Maybe every year the team is below the tax it moves the teams down 2 tiers of tax payments and if a team is down 3 seasons they they get a clean slate. But I really do like that idea that it just gets progressively more expensive to keep operating under the tax- and that teams do have a big incentive to eventually blow it up and trade expensive pieces away after it got too big.

But the thing to remember is that players hate the tax so with all the antitrust stuff going around strengthening the tax could be difficult.

[shrink]

This is an idea I've floated before as well. Say,

Under $70 mil .. no lux tax
$70 to under $80 mil .. 100%
$80 to under $90 mil ... 150%
$90 to under $100 mil .. 200%

etc.

Of course, there'd at least need to be an Allan Houston clause to get started, and probably much more.

The lux has been an effective tool for parity with the normal teams, but it doesn't work for large market teams, who's business model works better by overpaying for talent and recouping it in additional revenues.

And I would argue that these owners shouldn't be blatantly restricted from that model by a hard cap. If they want to pay, and a player wants the paycheck, they should be able to make that arrangement. However, making it more expensive, and passing those revenues to smaller market / financially responsible teams might improve the current compromise.

[rugby-hook]

What is the action that anyone wants deterred? The luxury tax is guard against runaway salaries, is a form of revenue sharing and tamps down the expectations of fans, agents and players alike. For most of the history of the LT, the payers were barely playoff teams and not really threats to win a championship. The decisice factor was when LA crossed the LT with the Gasol trade, but even then, the high payers like NY were not even in the playoffs and Dallas could not win a series. Portland was another payer that went nowhere. San Antonio/Detroit/Miami won within budget, NJ got the the finals. LA has now won as a payer, but Orlando/Cleveland/Denver were not real factors.

So before escalating the penalties, one needs to be certain that we know the behavior to be deterred. The current LT is hindering winning; salaries are heading down with the current penalty and income is being redistributed. Increasing the penalties is going to do what? Limit revenue sharing of the big markets, to pay for the LT, reduce rosters, and reduce experience vets in favor of DLeaguers. None of these outcomes aer positive for the game.

If you truly want to increase the bite of the LT, with less collateral damage, then reduce the margin between the salary cap and the LT. It would shave the cost of the MLE and may slow down some of minor FA salary increases.

In general, I think the LT and soft cap work. Could be talked into shorter contracts and a franchise tag, but think removing the MLE and soft cap is too restrictive for players. They need the ability to flee poor coaches and systems that are ill-fitting.