Mention Toronto to NBA players and they're not likely to discuss
the team's new owners or recent player changes or miserable
record. No, they will probably bring up a five-letter
combination that's more terrifying to them than DNP-CD: t-a-x-e-s.
When Toronto was awarded a franchise five years ago, Revenue
Canada interpreted its tax code so that players who didn't
maintain a permanent residence in Canada would have to pay the
heavier Canadian taxes on roughly 50% of their salaries, based
on the fact that half their games are played there. But last
spring the tax code was reinterpreted, and players began to be
taxed for each day they worked in Canada, meaning for games and
practices. They then paid Canadian taxes on about 65% of their
salary.
This change wasn't a hot locker room topic until after Raptors
vice president of basketball Isiah Thomas resigned on Nov. 20.
That triggered a trade request by point guard Damon Stoudamire,
the franchise's cornerstone, damaging the team's credibility.
The extra burden of Canadian taxes combined with the Raptors'
dismal play prompted Kenny Anderson's refusal to report when he
was dealt to Toronto by Portland. (He was rerouted to Boston.)
Last week the NBA tried to calm players' fears about Canadian
taxes, which commissioner David Stern characterizes as
"overblown and, quite frankly, ludicrous." According to the
league, a Raptor who maintains a residence in a nontaxed U.S.
state has a 48.0% tax rate; a Knick who lives in Manhattan, a
49.1% tax rate. (An accountant who prepares taxes for dozens of
pro athletes estimates that the Raptor would be taxed at 44%,
the Knick at 45%.)
"You never hear people who get traded from Florida to New York
say, 'I'm not reporting because of the taxes,'" says deputy
commissioner Russ Granik. "But it's close to the same thing."
The league has begun lobbying Revenue Canada to change its code,
and Granik says he will contact the union to discuss ways to
educate players on Canadian tax laws. Raptors officials are also
planning to embark on "a road show," as team president Richard
Peddie calls it, to present their tax data to agents.
Still, reversing perceptions about taxes is only one step in
enhancing the appeal of the Raptors, who were 12-42 at week's
end. The sale of the team to the owners of the NHL's Toronto
Maple Leafs last month has raised another concern: Are the
Raptors doomed to be second-class citizens to their owners? "We
have a huge economic interest in making the Raptors a tremendous
success," says Leafs minority shareholder Larry Tanenbaum.
"We'll do what's necessary to ensure that."
More than anything, Toronto needs blue-chip players. Former No.
2 pick Marcus Camby has not lived up to expectations, and
18-year-old rookie Tracy McGrady looks like he's in over his
head. Veteran Doug Christie demanded a trade last week, and
though he withdrew that demand, he clearly wants out. The
Raptors could be more than $10 million under the cap this
summer, but they will be forced to overpay for talent, as the
Grizzlies did to lock up center Bryant Reeves.
A player willing to give Toronto a look would find a
world-class, racially diverse, well-kept city with beautiful
parks and golf courses. The Blue Jays have certainly had no
trouble luring top major league talent to Toronto. But SI
contacted 10 players who will be among the most coveted free
agents this summer, and not one said he is planning to visit the
Raptors.
Issue date: March 2, 1998
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