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The taxman cometh Yankees win, O's hit hardest by luxury tax
Posted: Sunday January 23, 2000 10:23 PM
NEW YORK (AP) -- While the New York Yankees won the most, the Baltimore Orioles paid the most. Baltimore's total bill for the three years of baseball's luxury tax was $10,643,897, according to management records obtained by The Associated Press. The Yankees, who won the World Series twice in the three years of the tax, were second at $9,919,651, followed by Los Angeles at $2,712,672, Boston at $2,205,960 and Cleveland at $2,065,496. Only three others teams wound up with bills during the three years of the tax: Atlanta ($1,795,582) the New York Mets ($1,137,992) and Florida ($139,607). Teams received their bills for the last year of the tax Jan. 10, and they are payable Jan. 31. For 1999, the Yankees had the high tax bill for the second time in three seasons: $4,804,081. They were followed by the Orioles ($3,475,048), the Dodgers ($2,663,079), the Mets ($1,137,992) and the Red Sox ($21,226). While the Yankees finished with the best record in the American League and went 11-1 in the postseason, the Orioles were fourth in the AL East at 78-84 and the Dodgers were third in the NL West at 77-85. The luxury tax is based on the average annual values of contracts of players on teams' 40-man rosters as adjusted each day of the regular season, and was assessed on the five biggest spenders at a rate of 34 percent on the amount of salary above the midpoint of the teams with fifth- and sixth-highest payrolls.
By shedding payroll late in the season, the Dodgers and Orioles cut their tax bills significantly. Based on opening-day rosters, the Dodgers were projected to wind up with the top bill at $5,150,347, followed by the Yankees ($4,247,903), Orioles ($4,067,305), Braves ($772,506) and Mets ($525,156). The tax went out of existence following the season. Owners, unable to get a salary cap, agreed to the tax in the settlement of the 1994-95 strike, hoping it would slow the rate of payroll growth. It succeeded only very slightly, allowing the high-revenue teams to raise their payrolls to nearly $100 million last season and allowing them to dominate postseason play. Players insisted the luxury tax not be included in the final year of their labor contract. If it had been, the tax would have remained in place after the expiration of the contract until a new collective bargaining agreement took effect.
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