MLB’s first financial proposal for MLBPA includes reduced luxury tax to $ 180 million, Payroll – The Athletic

In a face-to-face meeting in Denver on Monday, Major League Baseball made its first proposal on core economics to the Players’ Association. The plan included a new tax on team spending, one that would both effectively lower the sport’s first luxury tax threshold to $ 180 million and charge teams that exceed the first, a higher percentage than they pay today. A trade-off that people briefed on the league’s proposal said would be a salary minimum of $ 100 million in the sport.

Money raised from teams that pay taxes would fund certain club salaries to a minimum, but details of the mechanism are unclear, including what sanctions teams could incur if they do not reach $ 100 million, or what year the minimum will take effect.

The current tax system includes three levels of expenditure, the first of which is $ 210 million. Today, a team that exceeds that amount pays a tax of at least 20 percent. In the new system proposed by MLB, the three levels would still exist and the new tax would be introduced under them — which would form the basis of what would work as a four-tier system. Taxation would start at 25 percent for teams over $ 180 million, and rates would rise from there.

MLB and MLBPA declined to comment. About Cradle contracts, seven teams began in 2021 with salaries expected to be below $ 100 million, calculated for luxury tax purposes.

The proposal included many other components that are not currently known, leaving an incomplete picture. But the player’s reaction to the luxury tax element was not expected to be positive. Even in the absence of further details on the proposal, the luxury tax is not a small matter, and the Players’ Association will almost certainly see that thresholds for luxury taxes are raised, not lowered, to stimulate spending.

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