James R. Coggins (www.coggins.ca) is a semi-retired professional writer, editor, and historian based in Chilliwack, BC, who, sadly, does not make enough to be personally affected by the proposed increase in income tax rates.“We're pulling out the stops to keep the Whitecaps here in British Columbia,” Premier David Eby said in June. But if Eby is re-elected in October, he might well drive the Whitecaps, British Columbia’s top professional soccer team, out of town. And the Vancouver Canucks might follow.Why? Because of Eby’s proposed “millionaires tax,” actually an increase in income tax rates on anyone making over $190,504.The point of this article is not to defend the overinflated and sometimes ridiculous salaries paid to top athletes. The point is rather to point out the implications of Eby’s proposal and look at the issue from the point of view of those affected.Players with both the Vancouver Whitecaps and the Vancouver Canucks will be affected by the new tax, but the salary situation of the Canucks is probably better known.Elias Pettersson is the highest-paid Vancouver Canucks player, with an annual salary of $11.8 million. Under Eby’s proposed plan, Pettersson would pay 24.5% provincial income tax on most of that income. That will still leave him with three-quarters of his massive income, so what’s the problem? The problem with that argument is that it overlooks the federal government’s top income tax rate of 33%. Eby’s proposal would raise the combined top marginal income tax rate from 51% to 57.5%. Canucks fans who complain that Pettersson is not playing well enough to justify his $11.8 million salary might find some consolation in knowing that he will be lucky if he gets to keep half of it, with the other half ending up in the hands of government..Okay, Pettersson is still well paid, even if not as well paid as it first appears. But what about Arshdeep Bains? The tax burden on his salary of $850,000 already approaches 50%. Or what about Guillaume Brisebois, who is in his tenth season of professional hockey and whose current $900,000 salary is by far the most he has ever earned?It is important to remember that professional athletes have short careers. Some players play twenty or more seasons, but the average player only manages to hang around for four to five years. Many of those players need to make enough money in those few years to last a lifetime — because many of them have neglected their education to pursue a hockey career, and some have bodies too worn out from the sport for them to be able to do some other jobs.Professional sport is highly competitive, in many senses. Four of the last seven Stanley Cup-winning teams have been based in Florida. Seven of the thirty-two NHL teams are based in Canada, which means that, on average, a Canadian team should win the Stanley Cup about once every four or five years. But no Canadian team has won the Cup in more than thirty years. Why?Florida has no state income tax. This means that free agent players will agree to accept less money from Florida teams, knowing that they will still end up with more money in their pockets than if they had signed elsewhere. The NHL salary cap is based on gross salary, not take-home pay, giving a considerable competitive advantage to teams from Florida and other low-tax jurisdictions. An increasing number of players are refusing to play for teams based in Canada, partly because of the higher taxation here. The Canucks are never going to win a Cup if their roster is composed of players who don’t have the skill to get a contract in a more lucrative market.Maybe it does not matter all that much if British Columbia’s sports teams never win a championship or if the teams themselves simply give up and leave town. But what is true of professional hockey players is also true of other professionals — architects, doctors, lawyers, accountants, engineers, scientists, businessmen, and administrators (including senior government administrators). Professionals are highly mobile and compete in a global marketplace. Eby’s tax may convince many of them to leave the province or to demand higher salaries to stay, driving up costs for everyone.James R. Coggins (www.coggins.ca) is a semi-retired professional writer, editor, and historian based in Chilliwack, BC, who, sadly, does not make enough to be personally affected by the proposed increase in income tax rates.
