Monday, April 13, 2009

The Jock Tax: Taxing Visitors Who Don't Vote

From the LA Times article "The Taxing Life of a Pro Athlete":

If opening day is the best day of the year for professional athletes, then April 15 -- tax day -- is probably the worst. Especially now that 20 of the 24 states with franchises in at least one of the four major pro leagues -- the NFL, NBA, NHL and Major League Baseball -- have laws that require visiting athletes to pay state income tax for each game they play there.

Considering that top-level athletes in football, basketball, hockey and baseball now make an annual average salary of $2.9 million, that means big bucks for states such as California. Home to 15 major professional teams, the state raked in $102 million in taxes from visiting athletes in 2006-07, the last year for which records are available.

As salaries have skyrocketed, the so-called "jock tax" has become widespread and controversial. Its imposition has raised questions of fairness and, for tax expert Joseph Henchman, has laid waste to the once-revolutionary prohibition on taxation without representation.

"Politicians are seeking to shift tax burdens to people that don't vote," he says. "It does create a rather disturbing trend because it essentially allows politicians to provide more government services than citizens are willing to pay for."

HT: TaxProf

18 Comments:

At 4/13/2009 11:57 AM, Blogger RG said...

NH residents working in MA have to pay MA income taxes. There is no income tax in NH.

How is this any different? No one complains about the unfairness of this, but suddenly rich athletes need to be protected?

 
At 4/13/2009 12:18 PM, Blogger 1 said...

"but suddenly rich athletes need to be protected?"...

Hmmm, envy of the rich?

You don't see a major flaw in this sort of extortion? 'each April, he pays a small army of accountants to file more than a hundred pages of returns -- and sometimes checks -- to as many as a dozen states and one province in Canada, covering taxes on income he earned on the road'...

 
At 4/13/2009 12:46 PM, Anonymous Anonymous said...

Would this also apply to performing musicians or other entertainers who perform...?

 
At 4/13/2009 1:45 PM, Blogger The Chinese Capitalist said...

Politicians are raising or creating new taxes on everything they can. Utility taxes, cigarette taxes. gas taxes, and new fees for everything. These are the reasons why people feel so much of their income is somehow "lost", even though the Federal income tax rates aren't at record levels. It also gives politicians some cover because all they do is mention the Federal marginal tax rates and claim that taxes are at reasonable levels when they're not. Time to stand up and say enough is enough.

Pro athletes are a very valuable and productive segment of society. Look at all the jobs they create, from the ticket collectors at the front door to the food vendors to the marketing departments to the staff needed to broadcast games. Without them, all those jobs would be gone, no one wants to see me play basketball. Enough of the ridiculous envy, what makes America great is that productive members can make money which creates jobs for others in support roles. Punishing the productive punishes us all.

 
At 4/13/2009 2:16 PM, Blogger Sotosoroto said...

The costs of these taxes do make it to the taxpayers in the form of ticket prices: players ask for more income to cover the cost of the taxes, and thus the owners have to raise prices to maintain their bottom line.

 
At 4/13/2009 3:29 PM, Anonymous Anonymous said...

sports entertainer bailout!

 
At 4/13/2009 5:27 PM, Anonymous Anonymous said...

A few years ago, Oregon began taxing the airlines when they overflew the great State of Oregon.

They should probably begin taxing the individual employees of the airline as well, for their income derived while in or over the State of Oregon.

 
At 4/13/2009 9:30 PM, Blogger Ben Eng said...

Speaking of taxation without representation, I think a much larger population that is being exploited are people like me: permanent residents. We are taxed and yet we are ineligible to vote.

 
At 4/14/2009 4:28 AM, Blogger 1 said...

"I think a much larger population that is being exploited are people like me: permanent residents. We are taxed and yet we are ineligible to vote"...

Well on the face of your comment Ben Eng it 'seems' you have two simple choices:

1) go back to your country of origin (which I hope you don't)...

2) become a citizen...

 
At 4/14/2009 7:10 AM, Anonymous Anonymous said...

Could this be a violation of the commerce clause of the U.S. Constitution?

 
At 4/14/2009 9:16 AM, Blogger ExtremeHobo said...

Good point anon 7:10! Also there is a racism element here because the highest paid athletes in these sports are disproportionately more African-American than white. (NHL is a bastion for white athletes but they don't get paid nearly as much as other pro sports).

 
At 4/14/2009 10:08 AM, Anonymous Eric H said...

Isn't this the commonly accepted trade-off for using tax payer funds to build the arena/stadiums said athletes play in?

 
At 4/14/2009 10:37 AM, Anonymous Anonymous said...

Not mentioned, but I assume the taxes paid to the state where the away game was played are off-set from the taxes otherwise owed to the player's state of residence.

 
At 4/14/2009 11:16 AM, Blogger KauaiMark said...

Taxation of targeted unrepresented populations isn't restricted to pro-athletes:

Hotel taxes (some as high as 14%) are all targeted toward non-residents. (...Don't sports stars stay in hotels on the road? Double taxed for visiting!)

In addition to property taxes paid by owners, Transit Occupancy Taxes (TAT) on timeshares in Hawaii and other states.

 
At 4/14/2009 2:11 PM, Blogger NoWhining said...

"Hotel taxes (some as high as 14%) are all targeted toward non-residents."

Try 15.4% in downtown Chicago...ouch!

 
At 4/14/2009 9:00 PM, Blogger retire05 said...

This isn't new. In 1960, Pennslyvania started taxing truck drivers based on miles they drove through PA.
Here is how it worked: if a driver was paid 40 cents a mile, and drove 100 miles through PA, that driver was required to file an state income tax form claiming $40.00 income which was subject to PA state income tax.

What happened then was independent truckers started avoiding PA. They didn't want to pay the tax to a state they did not live in when they knew their gasoline taxes were paying for PA roads and highways.

 
At 4/14/2009 10:51 PM, Blogger ExtremeHobo said...

I hope Virginia starts taxing DC for all our clean air they like to breathe over there.

 
At 4/15/2009 5:13 AM, Blogger OA said...

As a consultant I had to deal with this before. Depending on the state, some double taxed income. As in your resident state would still tax income that another state was taxing.

Until we break this mentality that taxes are ok as long as someone else pays them, this is par for the course.

 

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