New York Yankees amid record six teams paying

A record six teams are paying baseball’s luxury tax this season. Moreover, Los Angeles Dodgers are leading at $31.8 million followed by the New York Yankees at $27.4 million.

Boston ($4.5 million), Detroit ($4 million), San Francisco ($3.4 million) along with the World Series champion Chicago Cubs ($2.96 million) were also sent bills by the commissioner’s office, according to Associated Press.

The Yankees are paying for the 14th straight year since the tax surfaced. Their total added to a whopping $325 million. New York has said it aims to get below the threshold by 2018.

Los Angeles indebted for the fourth consecutive year and like New York pays at a 50 percent rate on the amount above the $189 million barrier. The Dodgers paid a record $43 million for 2015, making their four-year total to $113 million.

Boston and San Francisco pay at a 30 percent rate for the second year in a row. Detroit and the Cubs – a first-time surcharge – are at 17.5 percent.

The number of teams over the threshold crossed last year’s mark of four.

Yankees: Tax over the years

This year’s cumulative tax was $74 million.

Major League Baseball negotiated the luxury tax to cut down spending by large-market clubs. Moreover, combined with revenue sharing it has helped to increase the competition of small-market teams and those in between.

Luxury tax payrolls charts to increase marginally across the major leagues next year because of a provision in the labor contract. This change calls for the inclusion of salaries of players sent outright to the minors starting this Dec. 1.

The Yankees’ constant payroll was second at $224.5 million, up somewhat from last year’s $223.6 million. Followed by Boston ($200.6 million), Detroit ($199 million), the Cubs ($182 million), San Francisco ($181 million) and at last Los Angeles Angels ($173 million).

Luxury tax payrolls, what?

Luxury tax payrolls are based on the average annual values of contracts and earned 2016 bonuses. Regular payrolls include 2016 salaries, earned bonuses and allocated shares of signing bonuses. Luxury tax checks to the commissioner’s office are due by Jan. 21. Tax money is used to fund player profits and MLB’s Industry Growth Fund. Part of the money will be used to support player Individual Retirement Accounts from next year. Moreover, some part of the amount will be given to teams, not over the tax threshold.

Teams pay on the amount they are above the tax threshold. The tax rate starts at 17.5 percent for first-time offenders, then escalates to 30 percent, 40 percent, and 50 percent in subsequent years, resetting when a club slide below the threshold for a season.

From next year, the tax rates will be 20 percent, 30 percent, and 50 percent, with a 12 percent surtax on amounts $20 million to $40 million over the threshold. There will be an additional surtax of 42.5 percent on amounts $40 million over for first-time offenders and 45 percent for the next offenders.

 

Adam is an aspiring writer and an artist who plays with his band on the weekends. He loves to write about sports and watch them live any chance he gets. His favorite movie is "Home Alone". He loves watching his home team Birmingham City FC play while listening to House Music. Favorite Teams - Basketball: Spurts, Football: NY Jets, Soccer: Birmingham City FC.