Re: Dodgers' Luxury Tax
Posted: 20 Dec 2025 14:26 pm
Another interesting thing is that players get over one half of the luxury tax money. Just under half goes to the revenue receiving teams.
Luxury taxes were $403M in 2025. The first $3.5MM will be used to fund player benefits. Half the remaining money goes to players’ retirement accounts, while the other half is used for revenue sharing distribution from MLB to teams.
If the luxury tax threshold was increased or eliminated, the players stand to lose over $200M in retirement account contributions! That is maybe $200K per player; but I don't know how evenly it is distributed.
If the threshold was decreased and more luxury taxes are paid, the players get even more money secretly stashed in their retirement accounts.
So the players now have a interest in not raising the luxury tax limits too much and in increasing the taxes paid!
IMHO, the players should move toward making all the penalties monetary rather than some of the penalties being draft picks.
Clearly the top dozen teams do have the revenues to pay steep luxury taxes and the players don't mind receiving $200K+ in their retirement account each year. This does at least help shrink the expansive revenue gaps in the game today.
Luxury taxes were $403M in 2025. The first $3.5MM will be used to fund player benefits. Half the remaining money goes to players’ retirement accounts, while the other half is used for revenue sharing distribution from MLB to teams.
If the luxury tax threshold was increased or eliminated, the players stand to lose over $200M in retirement account contributions! That is maybe $200K per player; but I don't know how evenly it is distributed.
If the threshold was decreased and more luxury taxes are paid, the players get even more money secretly stashed in their retirement accounts.
So the players now have a interest in not raising the luxury tax limits too much and in increasing the taxes paid!
IMHO, the players should move toward making all the penalties monetary rather than some of the penalties being draft picks.
Clearly the top dozen teams do have the revenues to pay steep luxury taxes and the players don't mind receiving $200K+ in their retirement account each year. This does at least help shrink the expansive revenue gaps in the game today.