What is the 'luxury tax' in BB?

Answer 1

The luxury tax's purpose is to help maintain competitive balance, which is why you'll sometimes see it called the "competitive balance tax." It's often confused with revenue sharing, but they are completely different issues.

For each year of the CBA, a threshold is set - for example, that in 2007 will be $136.5 million. Any team that exceeds that amount will be assessed a level of taxation, and the amount will depend on how many times they've exceeded the threshold. For a first-time offender, it's 22.5%. For more info on thresholds and tax percentages, check this page:

http://www.bizofbaseball.com/index.php?option=com_content&task=view&id=394&Itemid=39

I'm not sure how much this luxury tax really helps. I'd personally rather see more go to the revenue sharing pool, where I believe the "poor" teams should have to spend a certain amount instead of pocketing the cash.

Hope this helps.

Answer 2

Baseball Luxury Tax, 2003-06
The luxury tax provisions agreed to Friday by baseball owners and players. The tax will be levied on the portion of a team's payroll above a threshold, and the tax rate for a team would vary depending on the number of times it exceeded the threshold. Figures for thresholds are in millions of dollars. Figures for rates are in percent).
Threshold (Figures in millions of dollars)
2003 2004 2005 2006
117 120.5 128 136.5


Tax Rate (Figures are percentages)
1st time 2nd time 3rd time 4th time
2003 17.5
2004 22.5 30
2005 22.5 30 40
2006 0 40 40 40
Note: Payrolls calculated using average annual values of contracts of players on 40-man rosters, earned bonuses and $9 million per team for benefits.




2003
Team Payroll Tax
N.Y. Yankees $171.1 $9.5
Texas $131.4 $2.5
Los Angeles $118.8 $0.3
2004
Team Payroll Tax
N.Y. Yankees $171.1 $15.2
Texas $131.4 $3.3
2005
Team Payroll Tax
N.Y. Yankees $171.1 $17.2
Texas $131.4 $1.4
2006
Team Payroll Tax
N.Y. Yankees $171.1 $14.0



Related information
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Answer 3

IT'S A FORM OF CORPORATE WELFARE FROM THAT USED CAR SALESMAN BUD SELIG. THE TEAMS THAT GET THE MONEY SHOULD SPEND IT DON'T. THOSE OWNERS ARE CROOKS.

Answer 4

its that idiot selig's idea to make the nyy pay. But it does not work- Joe Torre should be fired-The old bastard,