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Baseball Players See Cap in Tax

November 19, 1994|ROSS NEWHAN | TIMES STAFF WRITER

Officials of the baseball players' union continued to explore the full impact of the owners' new tax proposal Friday, but it is clear they will not accept it in its current form.

Speaking of the formula by which payrolls would be "taxed" under the plan, union lawyer Eugene Orza said, "It's obvious they are punitive rates. The numbers will not fly. The question is: Is there a system there that will lead to future talks?"

Orza seemed to believe there is.

"I have to believe the numbers are negotiable," he said. "I'm confident that at some point, we'll make a counterproposal."

That would be a positive development, putting owners and players within the framework of the same concept.

The sides met for two hours Friday with special mediator William J. Usery in Herndon, Va. Union head Donald Fehr called it a question-and-answer session relating to the 102-page tax proposal. Fehr said it was civil and businesslike, adding, "We have to make sure we fully understand the impact of what they've proposed before we can respond to it."

Even so, the union basically considers the current formula a salary cap in disguise.

It works like this: For every $500,000 that a club would spend on salaries and benefits above the average of the 28 payrolls--which last year was $36 million--the club would be taxed 1% of its total payroll. That formula would apply up to the point that a club goes $5 million over the average, at which time it would be taxed 1% of its total payroll for every $250,000 spent on salaries and benefits.

The Dodgers had a 1994 payroll of about $38 million. By going $2 million over the average, they would have been taxed $1,490,000.

The impact seems clear: Clubs will recoil from signing high-salaried free agents who would cost them almost as much in taxes as in salary.

The owners and players will meet again today, but it's unlikely that the union will be ready with a counterproposal.

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