The luxury tax: still meaningless

I know I'm getting into dead-horse territory with this point, but as long as people keep not getting it I feel like I'm going to have to keep saying it. Here's Tanya Bondurant of Pinstriped Bible, talking about Plan 189 in light of Ken Rosenthal's report on the revenue sharing refund pool yesterday:

If the team realizes that they may not end up with as much financial relief as they thought, could they be willing to just scrap the plan all together? A potential 50% luxury tax penalty is incredibly high, and the team would be smart to do everything they can to avoid throwing that extra money away, but would the money saved be worth it if they field a team that fails to be competitive? I don't think the goal of $189 million is a myth, but I do think it could easily be thrown out and forgotten if the front office doesn't see enough monetary benefit from suddenly needing to pinch their pennies.

Emphasis mine.

There are really two points I want to make here. First of all, it's probably best if everyone just give up on trying to figure out what set of circumstances might get the Yankees to give up on Plan 189. At the end of the day ownership is after higher profits, so the budget cutting itself is a heck of a big step in that direction, and the CBA enticements, however lucrative they wind up being, are just icing on the cake.

Secondly, and more importantly, you need to remember that the initial reaction to recoil in horror at the prospect of a "50% tax rate!" is just sticker shock. A 50% tax sounds prohibitive, maybe even downright crazy, which means that, like all things that sound mildly insane, you should search for the caveat. And the caveat with the luxury tax is that, a) it only applies to money over the "cap," and b) that cap is going up by $11 million along with the higher tax rates. That second factoid is so pertinent that if the Yankees were hit with the crazy 50% luxury tax rate last season their luxury tax bill would have actually been lower than the bill they paid at the lower rate, as $11 million was taken out of the calculation.

That's not to say that dipping below the luxury tax threshold and resetting the rate isn't a good goal to work towards over the long haul, especially if it's accomplished by not handing out unnecessarily large contracts to Alex Rodriguez and Rafael Soriano or giving more of their young prospects a chance to play. That's a very different strategy than the one they're employing now, however, which is to force a bloated payroll below a certain target as quickly as possible for maximum financial benefit to ownership. From a baseball standpoint we're already well past the point of logical decision making here (it's not like the luxury tax rate can't be reset in 2015 or 2016 if the team can reach the mark then), so the hope that the front office won't tolerate a season or two without a playoff berth to get there strikes me as wishful thinking more and more everyday.

(For more/stronger remarks on the Steinbrenners, be sure to give last night's podcast a listen)