The luxury tax in the NBA is a system that forces teams to pay extra money every season if they are over the salary cap, and that money is then redirected to teams that are not paying the luxury tax.
Recently, NBA insider Jake Fischer revealed that the 23 non-taxpaying teams would get a payment of $10,456,987 this year. The news was reportedly first revealed to the teams via a memo from the league on June 30th.
https://twitter.com/JakeLFischer/status/1551952638438244359
There have definitely been some complaints about the way the luxury tax works in the NBA. Warriors governor Joe Lacob called it “penal” and “unfair”, while pointing out that the team’s core were “all drafted”.
“The hardest thing of all is navigating this luxury tax, unfortunately,” Lacob said to Andre Iguodala and Evan Turner on the last episode of their “Point Forward” podcast. “I went back to New York this week for labor meetings. I’m on the committee. And you know, obviously, the league wants everyone to have a chance and right now, there’s a certain element out there that believes we “checkbook win,” we won because we have the most salaries on our team.
“The truth is, we’re only $40 million more than the luxury tax. Now, that’s not small but it’s not a massive number. We’re $200 million over in total because most of that is this incredible penal luxury tax. And what I consider to be unfair and I’m going to say it on this podcast and I hope it gets back to whoever is listening … and obviously it’s self-serving for me to say this, but I think it’s a very unfair system because our team is built by — all top eight players are all drafted by this team.”
Wiggins obviously wasn’t drafted by the Warriors but as Iguodala reminded Lacob, the former No. 1 pick was acquired from the Minnesota Timberwolves with his Bird Rights intact, meaning the Warriors could go over the salary cap to retain him.
“Right,” Lacob said. “And we have guys that were undrafted and we found and developed in Santa Cruz. We had not one free agent who isn’t a minimum. Not one. All minimums the guys we brought in this year. So the only guy you could make a case for us outspending the competition, not being fair is that we turned [Kevin] Durant leaving into one guy who turned into Wiggins, and that worked out great. But they all criticized us for doing it, said he was overpaid and that [we] did a bad deal. So you can’t have it both ways.”
The luxury tax system is designed to stop a team from accumulating too many elite players on the roster. Based on Lacob’s complaints, we can assume it is working, as the Warriors will face massive penalties if they want to extend players such as Andrew Wiggins and Jordan Poole.
It remains to be seen if the league changes the luxury tax system in the future. There should be a way for a team to be able to keep players that they drafted without getting hit with insane payments, and we’ll see if the league ends up coming up with a solution for this issue.
