The Los Angeles Dodgers topped a record nine teams owing Major League Baseball’s (MLB) luxury tax this year with an unprecedented US$103 million penalty, and the US$97.1 million bill for the New York Mets raises their tax total under high-spending owner Steve Cohen to nearly US$229 million.
The World Series champion Dodgers would pay a tax for the fourth year in a row. The Dodgers’ tax payroll of US$353 million included US$1,032,454 in non-cash compensation for Shohei Ohtani, whose contract calls for the use of a suite for games at Dodger Stadium and an interpreter.
The Yankees owe US$62.5 million, according to figures finalized on Friday by the MLB and the players’ association. They were followed by Philadelphia (US$14.4 million), Atlanta (US$14 million), Texas (US$10.8 million), Houston (US$6.5 million), San Francisco (US$2.4 million) and the Chicago Cubs (US$570,000).
Photo: AP
The total tax of US$311.3 million topped the previous high of US$209.8 million last year, when eight teams paid. Tax money is due to MLB by Jan. 21.
More than US$1 billion in taxes have been collected since the penalty started in 2003, with 15 teams paying US$1.23 billion. The Yankees lead at US$452 million, followed by the Dodgers at US$350 million and the Mets.
Toronto, with a series of summer trades, cut its tax payroll to US$233.9 million, under the US$237 million threshold. The Blue Jays started the season projected at US$244.3 million.
The Mets dropped their luxury tax payroll from last year’s record US$374.7 million to US$347.7 million and cut their tax from last year’s then-record US$100.8 million. The Dodgers, Mets and Yankees (US$316.2 million) were the only teams exceeding the fourth threshold, added in the 2022 labor contract and nicknamed the Cohen Tax in an initiative aimed at slowing his spending.
Among teams paying the tax, the Giants, Rangers and Cubs missed the playoffs.
Total spending on luxury tax payrolls rose 2.3 percent to US$5.924 billion from US$5.793 billion last year.
Tax payrolls are calculated by average annual values, including earned bonuses, for players on 40-man rosters along with just over US$17 million per team for benefits and US$1.67 million for each club’s share of the US$50 million pool for pre-arbitration players that started in 2022. Deferred salaries and deferred bonus payments are discounted to present-day values.
As they owe tax for three straight years, the Mets, Dodgers, Yankees and Phillies pay at a 50 percent rate on the first US$20 million above the US$237 million threshold, a 62 pecent rate on the next US$20 million, a 95 percent rate on the amount from US$277 million to US$297 million and a 110 percent amount above that.
Next year’s initial threshold is US$241 million. If the Mets, Yankees, Dodgers, Phillies. Braves or Rangers go over, they would pay at the highest tax rate, rising to 110 percent for the amount over US$301 million.
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