With the set to become sellers at this year’s trade deadline, there has been a lot of speculation about the and its desire to get underneath the luxury tax. The Jays are one of nine big-league teams that project to exceed the $237-million (U.S.
) competitive balance tax threshold. It would mark the second consecutive year the Jays have been taxpayers and, unless their situation changes, the penalties for doing so are set to increase this off-season. Teams that spend above the tax for the first time are taxed 20 per cent on their overages.
That number jumps to 30 per cent the second year and increases to 50 per cent in the third year and beyond. Once a team gets underneath the threshold again, the penalties are reset and the tax goes back to 20 per cent for the next offence. The financial ramifications are relatively minor.
According to FanGraphs’ Roster Resource, the Jays currently have an estimated payroll of $247.4 million, which means they have a projected tax bill of $3.12 million.
For context, that’s less than $4.21 million the Jays were expected to pay this season to have Cavan Biggio come off the bench. However, there are other penalties that must be factored in.
Taxpaying teams that lose a qualifying free agent to another club receive a compensatory pick after Round 4 of the MLB draft instead of after Round 2. Nontaxpaying teams that sign a qualified free agent lose their second-highest pick and $500,000 from their international bonus pool. Taxpayers lose their s.