Red Sox, Nationals Only Teams On Track To Pay Luxury Tax
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By Ronald Blum
NEW YORK (AP) — The Boston Red Sox and Washington Nationals are the only teams on track to pay baseball's luxury tax this year, according to opening-day payroll totals compiled by Major League Baseball and obtained by The Associated Press.
Boston's payroll at the start of the season for purposes of the tax was $233.9 million, which would cause the Red Sox to pay a $9.4 million tax. Washington's payroll was $201 million, which would result in a tax of $1.2 million.
San Francisco was just below the $197 million tax threshold at $196.66 million. The Giants were followed by the Chicago Cubs at $183.9 million, Houston at $182.4 million, the Los Angeles Dodgers at $181.99 million and the New York Yankees at $178.8 million.
New York was over the threshold from 2003-17, paying $341 million. The Dodgers have had the highest tax bill for the past four seasons and have paid nearly $150 million over the last five years.
By not paying tax this year, the Yankees and Dodgers would reset their base tax rates in 2018 from 50 percent to 20 percent of the amount over next year's threshold of $206 million. That would put them in better position heading into a free-agent class that includes Bryce Harper, Manny Machado, Josh Donaldson and potentially Clayton Kershaw, who has the right to opt out of his deal with the Dodgers.
Boston's base tax rate was 30 percent in 2016 but reset to 20 percent because the Red Sox dropped under the threshold last year. Under the surtax rules in the collective bargaining agreement that began last year, the rate for the Red Sox rises to 32 percent on the amount above $217 million this year, and the rate would rise to 62.5 percent on any amount above $237 million.
Because Washington paid tax last year, the Nationals' base rate is 30 percent and would rise to 42 percent on any amount above $237 million.
Luxury tax payrolls are based on the average annual values of contracts of all players on 40-man rosters and include $14,044,600 in benefits. End-of-season totals also will include earned bonuses plus reflect roster changes made throughout the season.
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