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- Major League Baseball (MLB) has a luxury tax called the "Competitive Balance Tax" (CBT). In place of a salary cap, the competitive balance tax regulates the total sum of money a given team can spend on their roster. Salary caps are common across professional sports leagues in the United States. Without these measures, teams would not be restricted on the amount of money spent on players' salaries. Therefore, teams with greater funding or revenue would possess a competitive advantage in their ability to attract top talent via higher salaries. The MLB implemented the competitive balance tax in 1997 to reduce anti-competitive behavior in the league. The Commissioner's Office sets the competitive balance tax threshold each year. Unlike other professional sports leagues, the MLB allows teams to go over the threshold, however, doing so results in the team being charged a tax on all overages. Per the MLB's 2017-2021 Collective Bargaining Agreement, the overage premium for exceeding the competitive balance tax is tiered as follows: The luxury tax increases based on the number of consecutive seasons above the CBT threshold. If a club "dips below the luxury tax threshold for a season, the penalty level is reset." In addition to the luxury tax, "clubs that exceed the threshold by $20 million to $40 million are also subject to a 12 percent surtax. Meanwhile, those who exceed it by more than $40 million are taxed at a 42.5 percent rate the first time and a 45 percent rate if they exceed it by more than $40 million again the following year(s)." The primary goal of the CBT is to encourage a competitive balance amongst teams while allowing big spending on players. The CBT threshold/tax rates have undergone several changes since 1997. (en)
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- Major League Baseball (MLB) has a luxury tax called the "Competitive Balance Tax" (CBT). In place of a salary cap, the competitive balance tax regulates the total sum of money a given team can spend on their roster. Salary caps are common across professional sports leagues in the United States. Without these measures, teams would not be restricted on the amount of money spent on players' salaries. Therefore, teams with greater funding or revenue would possess a competitive advantage in their ability to attract top talent via higher salaries. (en)
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- Major League Baseball luxury tax (en)
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