In my favorite fairy tale, baseball stadiums around the country would be filled to capacity by ravenous fans that were captivated by watching their local teams as they were actively in the hunt for a playoff spot.
That sort of competitiveness would be a good thing for almost everybody, and would ultimately put money into the pockets of the owners and players from every level of play in the sport.
Of course revenue sharing has done much to help small market teams stay in business, but the so called luxury tax is of little use in its current configuration. The money does not go to small market / under-performing teams, and never goes over a modest penalty percentage no matter how often a rich team tops the team salary limits.
Forgetting for a moment that it will never be enacted because it might benefit the many at the expense of the powerful few, consider this idea for a different sort of luxury tax.
I'd first propose that money from the luxury tax go directly to player salary support for the worst teams in the league. For sake of argument and working the math, say it would be split four ways.
Second, teams over the cap would have to pay 100% of their overage in the very first year. So if a team were over by $10 million, it would shed an extra $2.5 million to each of the the four lowest teams.
If they were still over in the second year by $10 million, the tax would double to $20 million, or $5 million per team.
At some point, not even the richest offender could ignore this doubling.
Requiring that the money go to player salaries somewhere in the A-AAAA system of ball would have to be popular amongst players. I think the players union would find this to be difficult to oppose.
This new system would put downward pressure on the biggest salaries in the league, and so no doubt the most vigorous opponents of the salary cap would also fight this.
The Yankees, of course, would oppose such a change with every fiber in their being, since they are the predominant beneficiaries of the current system, but I feel certain that some variation of this would benefit baseball as a whole.