As the Denver Broncos and Seattle Seahawks head to East Rutherford, N.J. to hear some pretty high-stakes tunes at the 2014 NFL Superbowl, tax season descends . . . and with it an informative article from the New York Times about “the jock tax.”
Since before the early ’90’s and the NBA reign of Michael Jordan and the Bulls, professional athletes have been paying taxes to the cities and states where they play. Peyton Manning, who makes about $15 million a season, will wind up paying about $60 grand for competing in New Jersey this year–4% of his income.
This tax article from nj.com explains the jock tax this way:
The tax is essentially a super-sized commuter tax, based not just on the gameday itself, but how many days an athlete is in the state, imposed on a prorated portion of the player’s salary for the year.
Apparently, by hitting out of state players and teams with the “jock tax” at a rate of about 9% the state of New Jersey pulls in about $10 million annually. If you make as much as Manning, proportionally speaking, you’re in much better shape than athletes who pay the same rates on a much lower income.
For narrative’s sake, there are two sides of the equation. On one side, we have athletes (lower paid athletes) and union representatives who feel this is unfair citing the daunting possibility that players may lose money by playing games. On the other side, you have team owners who make a lot of money from the “jock tax” and certain lawmakers who are sympathetic to their plight of protecting revenue streams that finance stadiums and the such.
Depending on the sport, some athletes are in better spots than others. For example, as part of the NHL’s recent revision of its collective bargaining agreement, the league pays the “jock tax” for its players. As the NYT article goes onto explain, pro basketball players pay out of pocket all taxes incurred by competing. In Tennessee specifically, players are hit with a flat rate that puts a larger strain on players who earn less.
The NYT article ends this way:
“It’s a system that over all unfairly singles out professional athletes,” said Stephen W. Kidder, a managing partner at Hemenway & Barnes, a law firm in Boston. “Hopefully, we will find a remedy.”
What do you think of “the jock tax?”
Remember as the snow descends in Jersey, tax season descends upon the country. It is time to pay up America. Call us to file for you at (425) 483-6600!