Where owners and players stand on the luxury tax, the key issue in their labor dispute. The tax would be levied on the portion of a team's payroll above a threshold, and the tax rate would increase each time it exceeded the threshold.
Threshold (Figures in millions of dollars)
2003
2004
2005
2006
Owners
107
107
107
111
Players
125
135
145
No Tax
Tax Rate (Figures are percentages)
1st time
2nd time
3rd time
4th time
2003
Owners
35
Players
15
2004
Owners
35
40
Players
20
25
2005
Owners
35
40
45
Players
20
30
40
2006
Owners
35
40
45
50
Players
--
--
--
--
Note: Payrolls calculated using average annual values of contracts of players on 40-man rosters, earned bonuses and $9
million per team for benefits.
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