The early analysis of the new CBA between the players and the owners is that the owners “won,” primarily because the new luxury-tax thresholds didn’t increase much and the penalties for going over are viewed as severe, with stuff like “92 percent tax rate” on high payrolls bandied about.
Could teams actually pay a 92 PERCENT LUXURY TAX?! Yes ... and no. Here's the math, using the 2014-16 payrolls of the Dodgers and Yankees -- baseball’s biggest spenders -- as case studies.
2017: $195 million
2018: $197 million
2019: $206 million
These are the penalties:
• First time over: 20 percent tax on the overage
• Second time: 30 percent
• Third time: 50 percent
There are also surtaxes:
• Between $20 million and $40 million over the threshold: 12 percent
• $40 million over: 42.