Taxes on Visiting Professional Athletes Spread
October 28, 2003
State and city governments are trying to maximize revenue by extending their income taxes to nonresidents who just work for a few days in their states, according to a new report from the Tax Foundation.
Economist David Hoffman explains that states started with "jock taxes" because it was politically popular to tax young, famous, high-income athletes. Unfortunately, state officials are now targeting all workers who cross their borders.
Hoffman has three major objections to taxing nonresidents:
- The tax is poorly targeted; while advertised as one that hits only ultra-rich athletes, it has quickly spread to many people with moderate incomes, such as trainers and scouts, and to other professions.
- The tax is arbitrary; professionals in other occupations with comparable incomes over their working lives, such as doctors and corporate executives, are not penalized by a "doc tax" or "exec tax."
- The tax imposes an unrealistic administrative burden; travelers can end up filing dozens of state and city income tax returns.
The tax has spread from California to 20 states and half a dozen cities, as well as Puerto Rico and Alberta. Hoffman indicates that professional athletes are the most famous but not the only targets.
Source: David Hoffman, "'Jock Taxes' Spread to Other Professions As State and City Governments Maximize Revenue: Routine Business Travel Triggers Income Tax Liability in Many States," Tax Features, Tax Foundation, July/August 2003.
Browse more articles on Tax and Spending Issues