Luxury Tax Rules

[BallSoHard]

Luxury Tax Summary:
Who is responsible for paying the Luxury tax:
Teams who are over the salary cap by more than $4,999,999.


What is the Penaltiy:
2 Points for every million over the salary cap once you have surpassed the threshold.
There will be no rounding at the current time.


Tax Deadlines:
Luxury Tax bill date: Bill will be handed out on Day 1 of the Playoffs.
Luxury tax payment deadline: All teams will need to pay the luxury tax bill before the first resigning period.

Tax Penalties for not paying Tax:
***This includes teams who can't afford it or teams who have not taken these points out of the bank. ***
-Teams who can not pay their bill will not be able to use either of their LLE or MLE until tax bill is paid off.
-Teams who can not pay their bill will ultimately be responsible for total balance.
-Teams

Where does the luxury tax Points go:
-Luxury points will be distributed to the bottom 10 teams in terms of standing in a weighted format to be determined later


Purpose of Luxury Tax:

1. Tanking- Losing out on a good share of points would slow most teams from tanking.
2. Distribution of points- Sure these teams with great accomplishments deserve more points, but the teams that need them would get some much needed help with this system.
3. Contracts- Right now there is not one signle deterrant to stop a team from offering bird year guys max money even if they dont deserve it besides flexability.
4. Gives us a more realistic trade enviornment- Bad contract will have to be moved. In the real NBA you see teams scrambling to get rid of salary to get under the lux tax threshold. This would probably produce the same results and teams with cap space can take these said players on and also force the teams over the trade to send points as well via a trade.
5. Allows middle tier Free agents to hit the market to spread wealth of talented assets: With the Lux tax, you'll have to make a decision like the Hornets made this season, do i pay S Jax the max so no other team can snatch him up or do I let him hit the free market and find a replacement for cheaper. I'm not sure most teams would have made the same decision under the current ruleset that the commish did. But I'd hope this would push teams to make that exact same decision. S Jax eventually went to the rebuilding Pistons and is doing quite well there. Pistons got more talent and may be a better team in a couple of years, Hornets are still great. Win-win.


Please see below for the projected Lux Tax bill is for the current season:

Penalty Cap Room Team
28 ($14,335,773) Boston Celtics
26 ($13,485,760) Golden State Warriors
24 ($12,623,253) Philadelphia 76ers
24 ($12,595,595) Sacramento Kings
22 ($11,956,177) Minnesota Timberwolves
18 ($9,197,880) Seattle SuperSonics
16 ($8,181,700) Los Angeles Lakers
16 ($8,156,245) Houston Rockets
10 ($5,676,275) Memphis Grizzlies
10 ($5,106,627) Los Angeles Clippers
194 Total

Projection:
Each of the bottom 10 teams would average 19 points each .

FAQ:
Q: If I am at $-6,999,999 what is my bill?
A: 12 points.

Please ask questions below and i'll do my best to answer them.

[Conroy]

Is this starting this year? As in will I have a bill day 1 of the playoffs this season. Sorry to bring this up again I know I'm the only one who does...(I kid, I kid)

[BallSoHard]

Is this starting this year? As in will I have a bill day 1 of the playoffs this season. Sorry to bring this up again I know I'm the only one who does...(I kid, I kid)

You receive the bill on day one. Don't have to pay till after the playoffs are per since you can still acrew points.

[bojangles837]

I wouldn't pay 24 points though. U stated it starts after 5 mil over. I'd pay 14 points then right?

[RaisingTheBar]

You receive the bill on day one. Don't have to pay till after the playoffs are per since you can still acrew points.

This does not apply to me but it is just a general question. Lets say someone is billed 20 points. But they only have 7 even after the playoffs. What happens then?

[BallSoHard]

This does not apply to me but it is just a general question. Lets say someone is billed 20 points. But they only have 7 even after the playoffs. What happens then?

They still would owe 13 and would not be able to use a MLE or lle until payment is made.

[RaisingTheBar]

They still would owe 13 and would not be able to use a MLE or lle until payment is made.

Understood.

[BallSoHard]

Here's the Lux tax Bills before the Trade DL:
Team Cap Room Projected Tax Bill
Sacramento Kings ($16,788,462) 32
Boston Celtics ($14,335,773) 28
Seattle SuperSonics ($13,462,164) 26
Golden State Warriors ($12,005,760) 24
Minnesota Timberwolves ($11,956,177) 22
Philadelphia 76ers ($10,583,253) 20
Los Angeles Lakers ($9,898,676) 18
Washington Wizards ($8,364,917) 16
Memphis Grizzlies ($6,348,083) 12

[Inner_GI]

Geez people. Control yourselves...

[LoCo89]

Ok explain to me what I'm not getting here:

Luxury Tax Summary:
Who is responsible for paying the Luxury tax:
Teams who are over the salary cap by more than $4,999,999.

So the threshold is basically 5 Million. If I'm at -$6,348,083 that puts me at 1,348,083 over the threshold

What is the Penaltiy:
2 Points for every million over the salary once you have surpassed the threshold.
There will be no rounding at the current time.

So wouldn't that equal only 2 points? I don't understand where 12 is coming from.

Unless you have us all paying a flat rate of 10 for being over, but theres no mention of that

[IamQuailman]

Flat rate of 10 once you are at $5,000,000. Then 2 points more for every $1mil after that

[LoCo89]

That's what I figured, just no mention of it in the rules

[TrayWithAnA]

It did say you don't owe for being < $5M which basically means that debt of 10 or less is written off. Once you make it into that next tax bracket though, you gotta pay for the rest of us below the threshold. Sounds like real taxes.

[LoCo89]

It did say you don't owe for being < $5M which basically means that debt of 10 or less is written off. Once you make it into that next tax bracket though, you gotta pay for the rest of us below the threshold. Sounds like real taxes.

That's fine and that makes sense, but that's just not the way it's worded

[BallSoHard]

Ok explain to me what I'm not getting here:



So the threshold is basically 5 Million. If I'm at -$6,348,083 that puts me at 1,348,083 over the threshold

Wrong, once threshold is met you owe for ALL monies owed past the cap figure. 5,000,000 -> 10 Points. 4,999,999 0 points. Thats why we have the threshold sir to try and be a little forgiving.

So wouldn't that equal only 2 points? I don't understand where 12 is coming from.

Unless you have us all paying a flat rate of 10 for being over, but theres no mention of that

It works out the same anyways. 5 million * 2 points = 10 points.. You owe nothing if your figure is 4,999,999 or below. Actually I see what you're saying. I'll reword it.

[Soundwave]

Is the projection up top current?
I guess we could go ahead make an official on since trade deadline is gone.

[Conroy]

Can this be updated. I'm sure it is somewhere but since this post is stickied it would be ideal to. Isn't there tiers now for every 10 mill you're over it's an extra point per mill?