A Complete History Of NBA Luxury Tax Payments, 2001-2022
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Since 2001, as a result of the 1998 lockout, the NBA has operated an escrow and tax system related to the net spend on player salaries. The tax, colloquially named the “luxury tax”, serves as an extra charge for teams that spend more on their payroll, and redistributes the excess to the teams that pay less, in a bid to curb excessive spending and ensure that money is distributed appropriately between players and owners.

In the early days of the luxury tax, it was more speculative and less punitive. Tax was only charged in seasons in which the league-wide salaries and benefits paid exceeded 61.1% (recurring) of all basketball-related income (hereafter BRI); the Collective Bargaining Agreement sought to limit player payroll spending to 55% of BRI, with the escrow system (which withheld 10% of player salaries) designed to correct any overspend. The tax only kicked in when the escrow system alone was insufficient to redress the balance. In the 2001/02 and 2004/05 seasons, salaries and benefits did not exceed the 61.1% threshold, and therefore no teams paid any luxury tax, no matter how sizeable their payroll was. (This was a great relief to the New York Knicks in particular, a prolific spender at the time.)

However, in those early days, a further complication was the fact that the threshold for when teams would start to pay luxury tax was retrospective, and based on a precise calculation of a season’s BRI that could only be done after the season ended. Because of this, teams had to operate on where they estimated the tax threshold would be, only to be subsequently charged based on where it actually was. It is for this reason that the first two seasons had until last year seen the two highest overall tax payments, of $173,313,440 and $157,212,990 respectively, with a record 16 teams paying it in that first season. (One of the 16, the San Antonio Spurs, were off only to the tune of $187,000 with their estimate, which was nevertheless enough to put them in the luxury tax and cost them a full share of the redistributed tax payments, worth roughly $15 million.)

Nevertheless, as the system developed over time, the guesswork was taken out of it. As of the 2005 Collective Bargaining Agreement, the luxury tax threshold is now automatically implemented every season, and the specific threshold amount is also determined in advance based on a league estimate of BRI. As a result, teams now know what their spending limit is, and if they go over it, it is by design. And there follows a breakdown of how and when they have gone over it.

In the 21 years since the luxury tax was created, it has been applicable in 19 seasons; in those 19 seasons, 28 NBA franchises have paid over $2.1 billion in payroll excess. Here is how much each franchise has paid in that span, and in how many different seasons they have paid it.

1) Golden State Warriors: $337,841,573 (5 years)

2) Brooklyn/New Jersey Nets: $297,855,872 (7 years)

3) New York Knicks: $248,542,987 (10 years)

4) Dallas Mavericks: $226,053,588 (11 years)

5) L.A. Lakers: $167,754,452 (10 years)

6) L.A. Clippers: $117,898,859 (6 years)

7) Portland Trail Blazers: $109,148,302 (6 years)

8) Oklahoma City Thunder/Seattle Supersonics: $106,443,551 (5 years)

9) Cleveland Cavaliers: $104,099,742 (5 years)

10) Milwaukee Bucks: $57,565,881 (3 years)

11) Miami Heat: $52,903,034 (7 years)

12) Boston Celtics: $50,632,705 (8 years)

13) Philadelphia 76ers: $47,312,039 (4 years)

14) Orlando Magic: $38,951,508 (3 years)

15) Toronto Raptors: $31,962,799 (3 years)

16) Utah Jazz: $30,851,888 (4 times)

17) Sacramento Kings: $30,518,745 (2 times)

18) Minnesota Timberwolves: $24,657,542 (3 times)

19) Denver Nuggets: $21,654,941 (4 years)

20) San Antonio Spurs: $17,513,321 (6 years)

21) Phoenix Suns: $15,632,239 (4 years)

22) Memphis Grizzlies: $15,338,994 (3 years)

23) Indiana Pacers: $8,889,087 (3 years)

24) Chicago Bulls: $8,130,677 (2 years)

25) Washington Wizards: $6,990,177 (1 year)

26) Houston Rockets: $5,632,243 (2 years)

27) Atlanta Hawks: $4,382,199 (2 years)

28) Detroit Pistons: $756,627 (1 year)

=29) Charlotte Hornets: $0 (0 years)

=29) New Orleans Pelicans: $0 (0 years)

Total: $2,185,917,572

With twelve seasons of paying luxury tax, including all but two seasons between 2002 and 2014, the L.A. Lakers are the most frequent taxpayer. Yet their highest individual payment of $50,749,202 in the 2017/18 season is nevertheless dwarfed by the recent checks of the Golden State Warriors, who paid $170,331,194 in the 2021/22 season alone. That single team’s single year payment is bigger than the cumulative amount every team paid in any prior season except in 2002/03 ($173,313,440, as above), and was part of a league-record $481,021,386 total tax paid last year, more than 250% larger than the previous highest. The punitive “repeater” tax thresholds introduced in the 2011 CBA, and further entrenched in 2017, have finally come to fruition.

The enormous amounts paid recently by the Warriors are a complete contrast to their previous habits; until 2015, the Warriors were tied with Charlotte and New Orleans in having never paid the tax. The Wizards were also in that club until their one-time payment of $6,990,177 in 2017/18, leaving the current and former Hornets teams as the only two still yet to cut a check.

The Oklahoma City Thunder have made a similar about-turn. Having gone taxless until 2014, they have paid it in five of the eight years hence, including a $61,617,183 bill in 2018/19 that as of the time of writing is the sixth-highest single season amount of any team (behind Golden State’s $170,331,194, Brooklyn’s $97,711,261 and the Clippers’ $83,114,692 payments, all last year, along with Golden State’s $68,942,909 in 2020/21 and Brooklyn’s then-record $90,570,781 in 2013/14 at the height of Mikhail Prokhorov’s care-free spending ways).

Since the 2005 CBA and the aforementioned change that allow for foreknowledge of the threshold, overall tax payment had, generally, been kept lower. Indeed, the lowest tax bill of any season came in 2019/20, when a mere four teams (Portland at $5,082,084, Miami at $2,461,242, Oklahoma City at $2,102,278 and Denver at $497,502) paid a mere $10,143,106 combined. That however is not the smallest amount of teams to pay in a single season – that record was instead set in 2016/17, when only Dallas ($24,773,953) and the Clippers ($3,632,580) paid anything at all.

The league-wide total tax paid per year breaks down as follows:

2001/02: $0 (tax not triggered)

2002/03: $173,313.440

2003/04: $157,212,990

2004/05: $0 (tax not triggered)

2005/06: $71,642,951

2006/07: $55,564,006

2007/08: $92,454,198

2008/09: $87,352,665

2009/10: $111,075,358

2010/11: $72,772,681

2011/12: $31,971,788

2012/13: $70,566,010

2013/14: $151,630,809

2014/15: $41,486,404

2015/16: $117,234,989

2016/17: $28,406,533

2017/18: $115,388,546

2018/19: $156,666,606

2019/20: $10,143,106

2020/21: $160,009,546

2021/22: $481,021,386

As for whether paying the tax is in fact conducive to winning, here is the amount paid in luxury tax by the NBA champions of that respective season:

2002/03 (San Antonio Spurs): $187,000 (16th highest tax amount paid of 16 taxypaying teams)

2003/04 (Detroit Pistons): $756,627 (12th of 12)

2005/06 (Miami Heat): $0

2006/07 (San Antonio Spurs): $196,082 (5th of 5)

2007/08 (Boston Celtics): $8,218,368 (6th of 8)

2008/09 (L.A. Lakers): $7,185,631 (5th of 7)

2009/10 (L.A. Lakers): $21,430,778 (1st of 11)

2010/11 (Dallas Mavericks): $18,917,836 (3rd of 7)

2011/12 (Miami Heat): $6,129,340 (3rd of 6)

2012/13 (Miami Heat): $13,346,242 (2nd of 6)

2013/14 (San Antonio Spurs): $0

2014/15 (Golden State Warriors): $0

2015/16 (Cleveland Cavaliers): $54,009,724 (1st of 7)

2016/17 (Golden State Warriors): $0

2017/18 (Golden State Warriors): $32,263,299 (2nd of 4)

2018/19 (Toronto Raptors): $25,190,963 (3rd of 5)

2019/20 (L.A. Lakers): $0

2020/21 (Milwaukee Bucks): $794,721 (7th of 7)

2021/22 (Golden State Warriors): $170,331,194 (1st of 7)

On five occasions so far, then, a team was able to win a championship without paying a dime of excess. And if all that still was not enough of an information dump to achieve full numberwang, here follows a graph with a full breakdown per year.

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