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{{Short description|Income tax levied against money-earning visitors}}
{{UStaxation}}
In the United States, the '''jock tax''' is the colloquially named [[income tax]] levied against visitors to a city or state who earn money in that jurisdiction. Since a state cannot afford to track the many individuals who do business on an itinerant basis, the ones targeted are usually high profile and very wealthy, namely professional athletes. Not only are the working schedules of famous sports players public, so are their salaries. The state can compute and collect the amount with very little investment of time and effort.

==History==
While "jock taxes" date to the 1960s, states started aggressively taxing the income of non-resident athletes in 1991,<ref name=Feldman>{{cite magazine|url=https://www.si.com/nfl/2018/04/17/nfl-players-tax-filings-athletes-salaries |title=The Taxing World of NFL Players' Finances |first=Jacob |last=Feldman |magazine=Sports Illustrated |date=April 17, 2018 |accessdate=August 19, 2019}}</ref> when [[California]] imposed the tax on the earnings of [[Chicago Bulls]] players who traveled to [[Los Angeles]] to play the [[Los Angeles Lakers|Lakers]] in [[1991 NBA Finals|that year's NBA Finals]]. [[Illinois]] soon retaliated, imposing its own "jock tax" on out-of-state players<ref name=Rocco>{{cite news|url=http://www.foxbusiness.com/industries/2014/01/31/new-jersey-jock-tax-tackles-super-bowl-earnings/ |title=New Jersey 'Jock Tax' Tackles Super Bowl Earnings |first=Matthew |last=Rocco |publisher=[[Fox Business Network|Fox Business]] |date=January 31, 2014 |accessdate=July 18, 2014}}</ref>—although Illinois' tax is only imposed on athletes from jurisdictions that impose jock taxes on Illinois-based players.<ref name=Merchak>{{cite web|url=http://taxfoundation.org/article/state-jock-taxes-lebron-better-miami |title=State Jock Taxes: Is LeBron Better Off in Miami? |first=Aaron |last=Merchak |publisher=Tax Foundation |date=July 8, 2010 |accessdate=July 18, 2014}}</ref> Other states followed suit; by 2014, the only U.S. jurisdictions with [[Major professional sports leagues in the United States and Canada|major professional teams]] without a jock tax were [[Florida]], [[Texas]], [[Washington (state)|Washington state]], and [[Washington, D.C.]]<ref name=Rocco/> (the three states do not impose personal income taxes, while the U.S. Congress [[District of Columbia home rule#1973 Home Rule Act|specifically prohibits]] the District of Columbia from imposing its income tax on non-residents who work there).

States are not the only U.S. jurisdictions that impose jock taxes—several cities impose their own jock taxes on top of those levied by their states. For example, since 2005, [[Pittsburgh]] has assessed what it calls the Non-Resident Sports Facility Usage Fee—a 3% tax on income derived from an individual's participation in any paid-admission event in a publicly funded venue, as long as the individual is not a city resident.<ref>{{cite web|url=https://apps.pittsburghpa.gov/finance/facility_usage_fee.pdf |title=Frequently Asked Questions: Non-Resident Sports Facility Usage Fee |publisher=City of Pittsburgh |accessdate=July 9, 2019}}</ref><ref>{{cite news|url=https://www.post-gazette.com/sports/pirates/2016/04/18/Pirates-players-situations-may-change-the-way-you-see-their-salaries/stories/201604180035 |title=Being a pro athlete can be taxing in many ways; just ask the Pirates |first=Stephen J. |last=Nesbitt |newspaper=Pittsburgh Post-Gazette |date=April 18, 2016 |accessdate=July 9, 2019}}</ref><ref name=Bell>{{cite web|url=https://www.bankrate.com/financing/taxes/pirates-pay-stub-highlights-jock-taxes/ |title=Pirates pay stub highlights jock taxes |first=Kay |last=Bell |website=Bankrate.com |date=June 9, 2015 |accessdate=July 9, 2019}}</ref>

==In depth==

The following is an in-depth analysis of modern-day examples and criticisms of the jock tax.

=== Examples ===

==== Alex Rodriguez ====
After the 2000 [[Major League Baseball]] season, [[Alex Rodriguez]] signed what was then the largest contract in American sports history, a ten-year contract worth $252 million, with the [[Texas Rangers (baseball)|Texas Rangers]]. The tax collecting authorities of other states were notified alongside the public, and would separately demand that Rodriguez's employer withhold the tax due from his salary and remit it to each of them. Even though the state of Texas did not have an income tax, he still had to pay the various state income taxes applied to each away game in each location except for Florida, Illinois, Washington state, and Washington, D.C. (as an American League player, he would visit the three states every season). It is estimated that Rodriguez paid $520,000 a year for state income taxes outside his own state. {{citation needed|date=June 2013}}

==== Tennessee "privilege tax" ====
[[Tennessee]], which has only a [[Hall income tax|limited income tax]] that excludes wages and salaries, began imposing its own special form of jock tax in July 2009, which it called a "privilege tax", and later repealed in April 2014.<ref name="USA Today">{{cite news|url=http://usatoday30.usatoday.com/sports/hockey/nhl/wings/2010-03-26-rafalski-tennessee-jock-tax_N.htm?csp=usat.me |title=Red Wings' Brian Rafalski says Tennessee 'jock tax' too much |agency=[[Associated Press]] |newspaper=[[USA Today]] |date=March 26, 2010 |accessdate=July 18, 2014}}</ref> The tax was unique in several respects. First, it was a flat-rate tax of $2,500 per game, imposed on all players who were on a team's roster for a game in the state, including Tennessee residents. However, the tax applied to a maximum of three games per calendar year.<ref name="USA Today"/> In another quirk, [[National Football League|NFL]] players were exempt—when first imposed, the tax only applied to [[National Basketball Association|NBA]] and [[National Hockey League|NHL]] players.<ref name="USA Today"/> In addition, the tax did not go to the state treasury. Instead, taxes imposed on NHL players went to the operators of [[Bridgestone Arena]] in [[Nashville, Tennessee|Nashville]], home to the [[Nashville Predators]],<ref name=Rau>{{cite news|url=http://www.tennessean.com/story/money/2014/04/07/tennessee-house-abolishes-jock-tax/7440595/ |title=Tennessee legislature abolishes jock tax |first=Nate |last=Rau |newspaper=[[The Tennessean]] |date=April 7, 2014 |accessdate=July 18, 2014}}</ref> while taxes imposed on NBA players went to the operators of [[FedExForum]] in [[Memphis, Tennessee|Memphis]], home to the [[Memphis Grizzlies]]<ref name=Lowe>{{cite web|url=http://grantland.com/the-triangle/paying-to-play-in-memphis-the-strange-case-of-tennessees-jock-tax/ |title=Paying to Play in Memphis? The Strange Case of Tennessee's Jock Tax |first=Zach |last=Lowe |series=The Triangle |work=[[Grantland|Grantland.com]] |date=July 19, 2013 |accessdate=July 18, 2014}}</ref> (both teams are Tennessee's only representatives in their respective leagues). Finally, because the tax was categorized as a fee, it could not be claimed as a deduction on other states' tax returns.<ref name=Merchak/>

Because of the quirks of the tax, some players on visiting teams were required to pay more in privilege taxes than they earned from games played in the state.<ref>{{cite news|url=https://www.nytimes.com/2013/12/13/sports/athletes-question-fairness-of-tennessees-jock-tax.html |title=For Some Players, Tax Ensures a Loss Even After a Win |first=Mary |last=Pilon |newspaper=[[The New York Times]] |date=December 12, 2013 |accessdate=July 18, 2014}}</ref> Another individual who was disproportionately affected by the tax was [[Chris Johnson (basketball, born 1990)|Chris Johnson]], who earned $54,000 for eight games with the Grizzlies under two 10-day contracts in {{nbay|2012|end}}, but was still subject to the full $7,500 privilege tax—the same amount collected from Grizzlies players who were on the team for an entire calendar year.<ref name=Lowe/> The collective bargaining agreement that ended the [[2012–13 NHL lockout]] called for team owners to pay their players' privilege taxes.<ref name=Rau/>

The Tennessee privilege tax was repealed in April 2014; the lead sponsor of the repeal bill noted that because the tax was imposed on NBA and NHL players but not on NFL players, it was [[Constitution of Tennessee|constitutionally]] suspect. It stopped being collected from NHL players starting with the {{NHL Year|2014|app=season}}, while the tax continued to be collected from NBA players through the 2015–16 season.<ref name=Rau/>

==== Andrew McCutchen ====
In [[2015 Pittsburgh Pirates season|2015]], [[Andrew McCutchen]], then an outfielder with the [[Pittsburgh Pirates]], inadvertently left the first page of his direct deposit pay stub for May 1–15 in the visitors' clubhouse at [[Wrigley Field]] after the Pirates finished a three-game series against the [[2015 Chicago Cubs season|Chicago Cubs]]. The stub was found by a visitor during a stadium tour and posted online. (McCutchen was not financially harmed by the exposure because the posted stub contained no bank routing numbers.) It revealed that he had state taxes for Illinois and Missouri, as well as city taxes for Philadelphia and St. Louis, withheld. In addition, Arizona, Ohio, and the city of Cincinnati were listed as potential tax recipients, but no money was withheld for those jurisdictions because the Pirates did not play in those places during the stated period. The stub also indicated that other taxable locales were "continued on next stub", which was not found by the visitor and thus never posted.<ref name=Bell/>

==== Brock Osweiler ====
A 2018 ''[[Sports Illustrated]]'' story on NFL players' tax situations began by examining the unusual 2017 tax situation of [[Brock Osweiler]]. In [[2016 Houston Texans season|2016]], Osweiler played for the [[Houston Texans]] in the income tax-free state of Texas, giving him what writer Andrew Feldman called a "tax filing [that] was about as simple as you can get for an NFL player", paying other states only for the days he actually spent in those jurisdictions. At the time, he maintained his residency in Texas. During the [[2017 NFL season|2017]] offseason, he was traded to the [[Cleveland Browns]], but was cut after the team's last preseason game and picked up by the [[Denver Broncos]], with the Browns paying almost all of his $16 million contract for that season while he played in seven games for the Broncos. Feldman added, "So what did his tax bill come to? The experts say ... ''they’re not sure.'' (emphasis in original)<ref name=Feldman/>

In 2017, Osweiler was indisputably liable for about $150,000 in Ohio state income tax for the time he spent in the Browns' preseason training camp at [[Baldwin Wallace University]] in [[Berea, Ohio|Berea]]. However, even though the Browns paid almost all of his season salary, an attorney with the [[Ohio Department of Taxation]] told ''SI'' that even though almost all of his income that year came from an Ohio source, the state could not tax him on income that was earned while he was not present in the state (assuming that Osweiler did not become an Ohio resident). According to several tax accountants consulted by ''SI'', Osweiler was liable for $600,000 in Colorado income tax based on his time spent in that state, plus another $150,000 to the other states in which he played in 2017. One accountant suggested a different possibility:<ref name=Feldman/>

<blockquote>One CPA suggests that Ohio and Colorado could ''both'' claim they deserve that $600,000, forcing an appeal and possible federal court case. The result could depend on whether the Browns paid Osweiler a lump sum before he left Ohio, or if he continued getting weekly payouts.(emphasis in original)</blockquote>

===Criticism of the "jock tax"===
In 2003, the [[Tax Foundation]] conducted a study on the jock tax. It concluded that the tax is:

* Poorly targeted
* Arbitrarily enforced
* Unrealistically burdensome to athletes

According to the foundation, the jock tax "forces traveling professionals to file potentially dozens of state and local income tax returns annually." The foundation argues that the jock tax is poor tax policy.

An analyst for the foundation pointed out in 2014 that because taxes are imposed on everyone who travels with a professional sports team, many individuals subject to the tax are not the stereotypical highly-paid athletes:<ref>{{cite web|url=http://taxfoundation.org/blog/both-teams-lose-super-bowl-because-jock-taxes |title=Both Teams Lose at Super Bowl because of Jock Taxes |first=Chris |last=Stephens |publisher=Tax Foundation |date=January 31, 2014 |accessdate=July 18, 2014}}</ref>

<blockquote>Many trainers and scouts do not earn much more than the national median income, and players earning the league minimum in some leagues, such as Major League Soccer, earn only around $35,000 per year. This can lead to a substantial tax complexity burden because many team members have to file income taxes in around 15–20 states each year. ... the tax hits many people who may not be able to easily absorb the substantial compliance costs associated with the tax.</blockquote>

The aforementioned 2018 ''SI'' story further illustrated this complexity. Because the [[Dallas Cowboys]] split their 2017 training camp between [[Oxnard, California]] and Texas, wide receiver [[Dez Bryant]] was subject to $10,000 in state income tax for every day the team spent in Oxnard. In the same year, the [[Miami Dolphins]] trained in Oxnard in the days following [[Hurricane Irma]], subjecting the team's on-site personnel to California's income tax for that period. [[Ndamukong Suh]] was subject to more than $50,000 in California income tax during this time. One unnamed [[2016 All-Pro Team|2016 All-Pro]] had federal, state, and city tax filings for that year that totaled 400 pages, and during the team's bye week went on a vacation to income tax-free Florida that saved him $20,000 in income taxes.<ref name=Feldman/>

One major sports league was able to partly address this issue. MLB successfully lobbied Arizona in the 1990s for an exemption from non-resident state income taxes during [[spring training]]. Since that time, the only players who are subject to Arizona income tax during spring training are those who make their permanent residence in the state. Similarly, during the season, the only players who are subject to non-resident Arizona income tax are those present for [[Arizona Diamondbacks]] games.<ref name=Feldman/>

==See also==
* [[Taxation in the United States]]

==References==
{{Reflist}}

==Further reading==
* {{Cite book |last1=Smith |first1=James E. |author2=Eugene Willis |year=2004 |title=West's Federal Taxation: Individual Income Taxes |edition=2005 |location=Mason, Ohio; London |publisher=South-Western; Thomson Learning |isbn=9780324207514 |oclc=56452768}}

==External links==
* [https://taxfoundation.org/tag/jock-taxes/ Tax Foundation articles on jock taxes]

[[Category:State taxation in the United States]]  
[[Category:Taxation in Tennessee]]