I believe the player has to be on the 40-man roster to count toward tax. This was talked about a lot when Allen Craig was taken off the 40-man roster.
http://www.overthemonster.com/2016/1/13/10759208/red-sox-allen-craig-offseason-trade-rumors
Peavy was 1.3 years of control though, so that commands a bit more.
Also, Iggy has been proven to be no more than a mediocre player (an accumulated bWAR of 2.9 with Detroit.)
I think Rich Hill might be a good get. The guy has actually pitched fantastically well since last September. Beane will be trading him somewhere, that's for sure.