where does luxury tax money go in baseball
Luxury tax (sports) The luxury tax is separate from revenue sharing, which is a system to balance out the income distribution between large and small market teams by dividing money from merchandise sales and media contracts. The money generated from the luxury tax is not distributed to the rest of the league, as is the case with the NBA, but rather is used for other purposes. The first $2,375,400 and 50% of the remaining total are used to fund player benefits, 25% goes to the Industry Growth Fund, and the remaining 25% is used to defray teams' funding obligations from player benefits.[6]
Jock tax The modern "jock tax" originated in 1991, when California imposed the tax on the earnings of Chicago Bulls players who traveled to Los Angeles to play the Lakers in that year's NBA Finals. Illinois soon retaliated, imposing its own "jock tax" on out-of-state players[1]â€”although Illinois' tax is only imposed on athletes from states that impose jock taxes on Illinois-based players.[2] Other states followed suit; by 2014, the only U.S. jurisdictions with major professional teams without a jock tax were Florida, Texas, Washington state, and Washington, D.C.[1] (the three states do not impose personal income taxes, while the U.S. Congress specifically prohibits the District of Columbia from imposing its income tax on non-residents who work there).