NHL commissioner Gary Bettman badly underestimates how much higher income taxes in Canada put Canadian teams at a serious competitive disadvantage by reducing players’ take-home pay and limiting their ability to attract top talent.
The NHL salary cap is a league-wide spending limit that restricts how much each team can spend on player salaries each season. It’s intended to promote parity but doesn’t account for geographic differences in taxation. As a result, players on Canadian teams effectively take home less money for the same salary as their American counterparts, putting those teams at a major disadvantage when competing for elite talent.
In a recent TNT broadcast, Bettman dismissed the idea that teams might adjust the salary cap to offset income tax differences, calling it “a ridiculous issue” and saying taxes were only “a little bit of a factor.” Pointing to high state taxes in California and New York, he asked, “What are we going to do? Subsidize those teams?”
But what Bettman either ignored or failed to fully grasp is that every Canadian NHL player faces significantly higher income taxes than any of their U.S. counterparts. According to the Fraser Institute, a Canadian public policy think-tank focused on economic performance and taxation, Ontario’s top marginal tax rate is 53.5 per cent, and even Alberta’s is 47 per cent. Compare that to the highest U.S. state rate among NHL locations: Minnesota at 41.85 per cent, California at 41.3, and New York at 38.85. Several states, including Florida, Texas, Nevada and Tennessee, impose no state income tax at all.
This tax gap translates into huge differences in players’ actual take-home pay, the money that lands in their bank accounts. And because NHL salaries are paid in U.S. dollars, Canadian-based players also lose out when converting their earnings to spend in Canada.
With a 2024–25 NHL salary cap of US$88 million, Toronto Maple Leafs players collectively earn $5.7 million less after taxes than Edmonton Oilers players, and a staggering $18.9 million less than players on the tax-free Florida Panthers. That difference alone could be enough to sign a star player and dramatically shift competitive balance.
This tax burden has real-world consequences. Fans frustrated by two decades of playoff disappointment in Toronto should look less to coaches and management and more to Canada’s punishing tax system, which either drives talent south of the border or limits how much Canadian teams can pay. Most elite players base their decisions not just on prestige or geography but on after-tax income, what they actually keep. Some might argue that lifestyle, legacy or market exposure also matter, but when millions of dollars are on the line, take-home pay tends to win out. Lower taxes are a proven magnet for high-priced talent, leading to better results and stronger teams.
University of Calgary economist Trevor Tombe calls this the “great divergence,” referring to the growing gap between the U.S. and Canadian economies. He points out that U.S. GDP per capita outpaces Canada’s by 43 per cent, and the gap is widening. This economic advantage means U.S. teams operate in wealthier markets with more financial flexibility, enabling them to offer players better after-tax compensation and attract top talent more easily than Canadian teams can.
Canadian teams also face more intense media and fan pressure in smaller markets, adding to their challenges. The NHL’s prolonged Stanley Cup drought for Canadian teams since 1993 isn’t just bad luck. Statistically, the odds of no Canadian team winning the Cup in over 30 years are about one in 781. Tax policy plays a major role in this unlikely streak.
In the end, don’t blame Bettman or the NHL. Blame the Canadian governments that keep imposing high taxes that punish success, stifle economic growth and keep Canadian teams from competing on a level playing field. Unless tax policy changes, or at least adjusts to reflect the realities of cross-border competition, Canadian hockey fans should expect more frustration and fewer championships.
Lee Harding is a research fellow for the Frontier Centre for Public Policy.
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