Canada’s high taxes are hurting our NHL teams

• Every 1 per cent increase in the local tax rate reduces a team’s win rate by 1.55 to 1.57 percentage points.
• Five of the last six Stanley Cups have been won by a team from a state with no personal income tax.

Montreal, May 28, 2026 – Canadian NHL teams are not on equal footing with their American rivals. Tax policies directly affect teams’ ability to attract and retain top players, finds a report published this morning by the MEI.

“Professional athletes have short careers and therefore a limited window in which to earn income through their salaries,” observes Vincent Geloso, senior economist at the MEI author of the report. “This creates a strong incentive to play where taxes are lowest.”

Canadian Teams Have a Tax Disadvantage

The NHL’s salary cap is based on gross salary rather than net salary. In practical terms, this means a team in a state with no income tax can offer exactly the same contract as a Canadian team while allowing the player to keep much more money in his pocket.

On a yearly salary of $750,000, a player on the Montreal Canadiens pays $364,312 in taxes, an effective tax rate of 48.5 per cent. For a player on the Panthers or the Stars, for example, this tax bill drops to $234,520, for a rate of only 31.2 per cent. That’s a difference of more than $129,000 per year on the same salary.

“The salary cap is supposed to level the playing field among teams. But when it’s calculated based on gross salary, it increases the advantage for teams in low-tax markets,” notes Vincent Geloso. “This disparity is particularly significant for free agents, who can choose their team.”

Effect on the number of wins

A study looking at the period from 1980 to 2017 revealed that income tax has a measurable effect on NHL win rates. For every one-percentage-point increase in the tax rate, a team’s win rate decreases by 1.55 to 1.57 percentage points.

This phenomenon is not limited to hockey. A study of soccer players in 14 European countries found that a 1 per cent increase in pay net of tax increased the supply of foreign players to low-tax markets by 1.22 per cent. Similar results have been observed in Major League Baseball, basketball, and golf.

“In professional leagues, a handful of wins or losses can make a huge difference: to the playoffs, to the standings, to a championship,” adds Mr. Geloso. “When tax policies force Canadian teams to work harder to attract the same players, that’s no small matter. It’s a real disadvantage, season after season

What is True for Hockey Players is True for the Whole Economy

Hockey shines a spotlight on this phenomenon, but it doesn’t end with sports. What applies to elite athletes applies just as much to researchers, doctors, entrepreneurs, engineers, and innovators.

These highly skilled workers also have strong incentives to settle where they can keep a larger portion of their income. When Canada becomes less attractive from a tax perspective, the entire economy pays the price.

You can read the MEI Viewpoint by clicking here.

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The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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