TCS Daily

The Jock Itch: Taxes

By C. C. Kraemer - October 26, 2004 12:00 AM

Though they're no doubt elated just to be there, the wealthy Boston Red Sox players can be excused for being bummed facing the St. Louis Cardinals as their opponent in this year's World Series. Had it been the Houston Astros, they would have been sure that after the games are played -- beginning tonight at Minute Maid Park, and not Busch Stadium -- there would be no tax man waiting for them with his hand out. Instead, players from both teams will been reaching into their pockets in the other team's city to pay what's become known as the "jock tax."

The 20 states that have the jock tax -- which ranges from 3 percent in Illinois to 9 percent in California -- have the athlete-entertainers fill out the piles of excessive forms that go with the tax. The political left will say that the millionaire ballplayers won't miss the few dollars they pay every year to the cities and states they play in. Hey, San Francisco left fielder Barry Bonds' not-so-modest salary pays him more than $200,000 a day. Why shouldn't he give some of that back?

That argument misses the point. There is a fairness issue. Professional athletes and entertainers can make millions of dollars over a brief term, but that's no reason that they should be singled out for what looks exactly like government-sponsored revenge against their success. Some might say high-priced athletes and performers are selfish or greedy when they want to keep as much of their millions as possible. But when it comes to greed, no one is more avaricious than elected officials. They want to keep as much of other people's money as possible.

There's also the taxation without representation issue to consider. Those who are subject to the tax have no vote in the states and cities that tax them.

While professional athletes and entertainers have a hard time avoiding the tax, business travelers don't pay the tribute when they make work-related trips to the jock tax states and cities. Neither are trial lawyers, whose lifetime earnings can match the salaries that star athletes make in their short careers, subject to the tax. (Except in New Jersey, which should get some credit for recognizing a brood of vipers when it sees one.)

While physicians, pilots, professional golfers and female professional basketball players can avoid the tax, it seems skateboarders, stunt bicycle freestylers and inline skaters can't. When Cincinnati hosted the Mobile Skatepark Series last year, $80,000 in prize money was available. The city actually hounded the kids who won with bills for the city's 2.1 percent income tax. Some kids were asked to fork over amounts as small as $4.20.

Extraordinarily wealthy athletes and a few kids with unusual talent aren't the only victims of the jock tax, though. It also hits managers, coaches, trainers, announcers and other support staff that travel with the team, right down to the guy who washes the jocks. It's the same with the associates who make up the entourages that travel with entertainers. Typically, with the exception of a few highly paid managers and coaches, these folks don't make nearly as much as even the lowest paid athletes. To tax their more modest incomes, and to tax them twice, borders on the venal.

Yes, that's right: The jock tax is a double tax.

"The premise of the jock tax is that an athlete should pay taxes on money he earns while working in a state where he does not reside. One might assume, then, that since a person can work in only one state at a time," write Scott Hodge and David K. Hoffman of the Tax Foundation, that while he is working on the road in a jock tax state, his salary would not be subject to the income tax in his home state for those days.

"This, however, is not the case." Only a few states offer credit for income taxes paid elsewhere and in some cases the credit is only partial.

Hodge, president of the Tax Foundation, and Hoffman have traced the roots of the jock tax to a single retaliatory act. It was invented in California, the fatherland of a lot of bad ideas, as vengeance against Michael Jordan and the rest of the Chicago Bulls who beat the Los Angeles Lakers in the 1991 NBA finals.

"Illinois retaliated the following year by levying a jock tax of its own," Hodge and Hoffman wrote in a Tax Foundation special report. Dubbed "Michael Jordan's Revenge" in the press, Illinois tax applied strictly to players from states that taxed visiting athletes, which at the time was only California.

Now that's solid rationale for tax policy, isn't it?

Despite the shameful beginnings of the jock tax and its overt unfairness, average people aren't likely to care much about it. They will, though, when elected officials eventually figure out a way to tax them when they work out of state. Don't bet that there aren't some lawmakers working on that right now.


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