The Yankees will have to pay a luxury tax bill of $US29.1 million this season
according to Bob Nightengale of USAToday, further demonstrating why it is so important to the Yankees that Alex Rodriguez be suspended for the 2014 season.
The luxury tax bill is based on the Yankees’ $US236.2 million payroll and a 50% tax rate on every dollar above the $US178 million luxury tax threshold. Since the Yankees have been over the threshold repeatedly, they pay the maximum rate.
The Yankees will continue to pay the 50% tax rate as long their payroll remains above each year’s threshold. However, if the Yankees can get below the threshold in 2014, their tax rate would reset and drop to just 17.5% in 2015 if they go over the threshold again.
This year, the Dodgers have a $US234.5 million payroll. However, they will pay just $US9.9 million in luxury tax since they were not over the threshold last year.
Of course, the only way the Yankees will be able to get under the threshold in 2014 is if A-Rod is suspended and his $US25 million salary is off the books. That, combined with the retirement of Mariano Rivera ($10 million salary), will make it much easier to get the payroll down to the 2014 threshold of $US189 million.
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