Montreal Canadiens forward exposes the NHL's bias against Canadian teams

Montreal Canadiens forward Michael Pezzetta was on a hockey podcast where he revealed the reality of playing in a Canadian market, especially when it comes to taxes.

NHL players across the league have to sacrifice a significant chunk of their salaries every year in taxes. However, all taxes are not created equal as taxes in Vancouver for example are much higher than Florida, which has no state income tax. Thus, Victor Hedman is only paying taxes to the U.S. federal government, while Elias Pettersson is paying taxes to both the Canadian federal government as well as the B.C. provincial government.

Montreal is arguably the worst place to play in the entire league due to taxes as Quebec has the highest provincial tax rate, with 25.75% of all income over 126,000 CAD being paid to the provincial government. For reference, California is a state that often gets a lot of criticism for high tax rates, but even their top tax bracket is only 12.3%, and that only kicks in at just under a 700K income threshold.

Pezzetta correctly pointed out that 54% of his income was being withheld when he got his first NHL paychecks. Quebec's tax rate, combined with the Canadian federal rate, means that most NHL players in Montreal are paying just over a 54% effective tax rate on their income. However, escrow, money that the NHL withholds from their players as Pezzetta mentions, is not considered taxable income, so the 14% that he references there would actually slightly lower his own effective tax rate as any money that goes into escrow will not be taxed. Furthermore, the escrow rate changes yearly, and has been declining since the league has started recovering from the Covid shutdown period.

Unfortunately, this is the simple reality of the NHL. Some places are more business friendly than others. That doesn't mean that teams in tax heavy markets cannot compete though. The San Jose Sharks for example, where one of the best teams in the league for a long time before they started their rebuild. However, it is notable that three of the last five Stanley Cup Champions have come from Florida, with no state taxes.

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