Pay to play.

Chris Johnson finally realized his dream of playing in the NBA when he signed two 10-day contracts with the Memphis Grizzlies in the ’12-’13 season. Countless hours in the gym perfecting his craft appeared to pay off (literally and figuratively) when the Grizzlies offered the rookie a spot on its playoff-bound team. In Johnson’s first game as a Grizzlie, though, he faced not one, but two formidable opponents: the Los Angeles Lakers and the Tennessee “jock tax.”

A “jock tax” is a state or local tax on traveling business professionals, often levied specifically on visiting professional athletes. Essentially, instead of raising taxes on its residents to cover expensive projects like sporting venues–the FedEx Forum in Memphis comes to mind–some state authorities tax professional athletes who (in theory) make a lot more money than the average fan. And so, states like Tennessee literally require professional athletes to pay to play. “Hey, Lebron, nice triple-double. That will cost you $2,500.”

One of the reasons Tennessee’s jock tax is so perplexing is that it requires players in the NBA and NHL (though not the NFL), whether on the home or away team, to pay a flat tax of $2,500 per game (capped at 3 games–$7,500–per calendar year). So, if the Red Wings play the Predators three times in a given year, each player on Detroit’s roster (including the backup goalie) will cough up $7,500 in taxes, which is the exact same amount a member of the Predators would pay for playing forty-one home games–a full season. So much for treating others as you would like to be treated, Tennessee.

Will Tennessee’s arbitrary jock tax ever get repealed? Guess we’ll have to wait and see.

–Jake Raff

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9 Responses to “Jock” Taxes in Tennessee

  1. Jacob Marshall says:

    This actually seems like a terrific idea. While the flat fee likely isn’t ideal, it isn’t like TN voters – with our sales tax and no income tax – is particularly worried about regressive vs. progressive tax codes.

    What is really useful about the tax is, if other states adopt it, players’ unions will start considering the tax when negotiating CBAs and calculating how much players should get paid with the tax in mind. That will in turn force the owners to indirectly pay the tax, letting more states and local governments force owners to pay for their own stadiums.

  2. Caitlin Buckstaff says:

    I agree that it seems arbitrary, and rather unfair, to have the benchwarmer pay as much as the star player given the discrepancy in income. However, I am not sure that “pro-rating” based on income is the right answer. Just as it is unfair from the perspective of the player with less income to pay just as much as the player with a higher income; it is unfair from the perspective of the player with more income to pay more money just because he simply makes more money. There seems to be some questions as to how to make it fair equitably to all players and interests involved. This is a similar issue right now at the college level with the O’Bannon case. A favorable outcome for the former and current college athletes means they will be compensated for their university’s licensing of their image and likeness. But, the debate is over how the university’s revenue will be disbursed among the players. It seems, like the professional athletes paying a fee based on the income level, that the athlete whose likeness is used more should receive more money than a player whose likeness is not licensed. Yet this will likely not happen because many fear that this will lead to resentment amongst the players. I wander if the NBA has a similar fear – they make everyone pay a uniform fee to preserve team morale.

  3. John Craven says:

    Great post Jake! This method of revenue generation is very interesting. While I like the idea of shifting taxes from the local residents to high paid professional athletes, I agree with everyone else that the flat tax regardless of athlete pay is very arbitrary. Maybe taxing the team itself rather than the individual players would be a better route to take.

  4. Danielle Barav says:

    I agree that tying the “pay to play” fees to total earnings seems more equitable. I think a lower fee charged for each game could also be a fair scheme, however. That way, home teams no longer get a windfall and traveling teams have a smaller financial burden that, perhaps, the team’s management could cover as part of the costs of doing business. If the charge were more like the minimal “airport tax” that is added to flight tickets, athletes may resent it less. As it stands, though, $2,500 for a single game is a very hefty per person fee!

    • Jake says:

      It sure is, Dani. Especially for players like Chris Johnson.
      On a side note, as a fan and/or resident of Tennessee, should one be concerned with the fact that the operators of Memphis’ arena are reaping this windfall, and not the state?

  5. Emma says:

    I agree that the tax seems pretty unfair given the disparity in earnings from athlete to athlete. Perhaps Tennessee should just call it what it is instead: a fee to play here. Tying the amount to the number of games played in the state doesn’t seem too fair either though, especially when it’s irrespective of total earnings.

  6. Kim Smith says:

    Will, I think you raise an interesting point regarding the difference in salary from athlete to athlete. It reminds me of the debate surrounding the paying and taxing of Olympic medal winners last summer.

  7. Will Wojcik says:

    Great article Jake. The most unusual part about these taxes is that they are so potentially inequitable. The Chris Johnsons’ of the world pay the same fee as well-paid players like LeBron James, which does not seem very fair considering how much LeBron makes compared to Johnson. A tax system based on how much the player makes yearly seems a little more fair.

    When you are an athlete that competes internationally, paying taxes becomes even more cumbersome. Phil Mickelson just won the British Open and the Scottish Open this month. His total winnings for both tournaments totaled over 2 million dollars. Great Britain will tax Mickelson at a 45% rate, California will take about 13%, and he will pay a small amount of federal taxes as well. After all the taxes are paid, Mickelson will keep about 30% of his winnings.

  8. Samantha says:

    Wow, this is really interesting. Something about this tax doesn’t seem right. At the very least it seems like a uniform rate should be charged per game for all athletes – whether or not they are based out of Tennessee.

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