NCPA - National Center for Policy Analysis

WASHINGTON STATE JUMPS ON "JOCK TAX" TRAIN

February 3, 2006

When Seattle Seahawk's quarterback Matt Hasselbeck plays in the Super Bowl on Sunday, Michigan's Department of Revenue will be waiting to intercept 3.4 percent of his earnings for the days he works in Detroit.

Hasselbeck's $8 million salary and potential $73,000 in payout from the NFL could force the Seattle signal-caller to hand off $10,000 in taxes to a state where he has no residence and no affiliation, say observers.

  • Like 19 other states, the Wolverine State imposes a "jock tax," which could cost the Seahawks nearly $300,000 just to play at Ford Field -- and that doesn't include every coach, trainer and water boy.
  • Piling on, the city of Detroit leverages a 1.275 percent tax on athletes, which could bring in $200,000 for hosting the Super Bowl.
  • Michigan's tax is on the low end of the spectrum. California levies up to a 9.3 percent rate, the highest in the nation. Pennsylvania, home of the Pittsburgh Steelers, charges 3.07 percent.
  • Washington is one of just four states -- along with Texas, Tennessee and Florida -- with major professional teams that don't have an income tax, and subsequently do not impose a jock tax on nonresident athletes.

That may soon change. Rep. Chris Strow (R-Clinton), has proposed a bill to impose a surcharge on out-of-state professional players when they play in Washington state.

To abide by nonresident athlete tax laws, Hasselbeck would have to file forms in eight different states where he played this season (two exhibition, five more in the regular season and one playoff location). To calculate athlete taxes, accountants must consider the number of active duty days in each state, the sliding tax scale and the daily salary with incentives.

To make matters worse, cities are hopping on the bandwagon, say observers.

Source: Associated Press, "Washington state jumps on 'jock tax' train: Professional athletes must pay to play in 19 states across the nation," MSNBC.com, January 30, 2006.

 

Browse more articles on Tax and Spending Issues