Owners have moved away from a steeply punitive luxury tax system in the latest rounds of NBA lockout talks, reports SI.com’s Zach Lowe. The league had been pushing for a graduated luxury tax in which the penalty increased as teams’ payrolls got further from the salary cap. The old luxury tax system, in place for the past decade, was a simple dollar-for-dollar penalty above a threshold that ended up being roughly 20 percent higher than the league-set salary cap.
NBA Lockout: Owners Move Away From Steeply Punitive Luxury Tax, Says Report
A few teams have seen fit to exceed the luxury tax threshold annually under the old rule; the Dallas Mavericks paid the tax in each season during which it was in effect, and the New York Knicks joined them every year until 2010-11, after GM Donnie Walsh cleared the decks for the 2010 free agent class.
Owners wanted a new system to make teams like the Mavericks, Knicks and L.A. Lakers -- who went $20 million over the tax line in each of the past two seasons -- think twice before adding players when they have already crossed the tax threshold. The players’ union has reportedly agreed to strengthen the tax penalties somewhat, but wasn’t willing to go as far as owners wanted to. We’ll see where exactly the negotations end up.
This is separate but parallel to attempts by the league to regulate the types of moves teams over the tax line can make, which would essentially create two different salary caps in the NBA.
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