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INSIDE THE NBA
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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