What is this luxury tax? Who pays it? Who do they pay it to?
The luxury tax is paid by teams that have payrolls over a specified amount to a general fund that the Commissioner’s Office apportions to the other teams according to some formula.
The sticking point in the current negotiations is that the owner’s want a lower threshold for the luxury tax to kick in than it does now. The players don’t want that because it serves as a check on their salaries. Big market teams (especially the Yankees) don’t like it because they have to shell out money which they earned to prop up stupidly run franchises like KC or Detroit.
In Monopoly, if you land on “Luxury Tax” you pay it to the bank or put it into the kitty to give to the next person who lands on “Free Parking” although the latter variation is not in the official rules of Monopoly.
The franchises that make hordes of money would withhold a certain percentage of the player’s salaries which would be redistributed to other teams which don’t make as much money. The basic idea is to get the Yankees and other high profile teams to subsidize the little guys.
I like to think of it as baseball welfare. 