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NBA Tax Level Limbo Bar Raised, No Less Treacherous

NBA Salary and Luxury Tax
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NBA Salary and Luxury Tax

On Tuesday, the NBA announced an increase in its salary-cap and luxury-tax levels for the upcoming season. Derick E. Hingle-USA TODAY Sports

Before the new CBA rolled in, NBA owners had the luxury of raising the ceilings around them according to the height of their stacks of money. Big market teams, especially those owned by sports-happy nuts or who signed lucrative media deals, could just overspend the little guys to a championship. With a soft $1-for-$1 tax penalty in place, the spoils went to the richest, and the limbo dance that was supposed to curb heights did little of that.

Cue July 9, 2013―or, the day when the new incremental tax levels for overspending were released by the NBA league. They look as follows (courtesy of NBA.com):

  • If team salary falls within range of $0-$4.99 million over tax level, the penalty is $1.50 for every $1 over the limbo bar

  • If team salary $5-$9.99 million over tax level: $1.75 for every $1

  • If $10-$14.99 million over: $2.50 for every $1

  • And if $15-$19.99 million over: a whopping $3.25 for every $1

(Rates increase by $0.50 for each additional $5 million of team salary above the last tax bracket, as in over $20 million above the tax level).

These steep penalties were instated to foster a more balanced competitive reality in the league so that teams like the Lakers couldn’t just buy their ways out of rebuild eras. For the 2012-13 campaign for example, with far less punitive penalties, the Lakers owe $29,259,739 in just tax fees. With Dwight Howard a rocket and Metta World Peace amnestied, they’ll have more wiggle room to sign players, but already with Kobe, Gasol, and Nash signed to 2013-14, they have to bite down hard on a $60 million dollar team salary. That’s a stranglehold for a team looking to move into a new era and whose best player will be out for a good chunk of the year.

Luckily for the Lakers, they only have Nash’s salary of $9.7 million tied to them for the 2014-15 season. At that point they can trade Gasol, sign Kobe for far less money (if they want to remain competitive), and build around guys like Jodie Meeks, Jordan Hill and any new trade pickups or signings.

Things get more hairy for squads like the Brooklyn Nets who are projected to pay $98 million in salaries in 2013-14, which will be taxed at almost $70 million. That’s a $168 million load for a team that has no guarantee of even reaching the Eastern Conference Finals, especially when the Pacers just got better and Derrick Rose is healthy again.

Before we know it, probably around the 2015-16 mark, the league will start to look a lot more like the NHL, where any team can be a potential contender in any given year. Dynasties will be harder to come by in the new treacherous limbo bar the NBA tax level sets. That’s a good thing, right?

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