Lots of states have “jock taxes,” taxes levied on professional athletes – both home and visiting – for making an income while playing in that state. It’s a way to grab money from high-paid athletes who don’t generate much public sympathy and most of whom aren’t registered voters in that jurisdiction.
But the Tennessee tax is strange, according to Ron Klempner, the interim head of the NBA players’ union, and several other tax experts who have addressed the issue. Any NBA player who is on a team’s roster during any game in Memphis has to pay a flat tax bill of $2,500 for that game. (The same goes for NHL players who pop into Nashville to face the Predators.) The tax applies to a maximum of three games, so that no player pays more than $7,500 per calendar year, Klempner says. The flat rates apply to each player, regardless of his individual income level, and they also apply to Memphis players
I’m no tax expert, but at face value, $2,500 per game seems excessive, and the flat fee seems unfair. A minimum-salaried rookie will make $2,883 per day next season, so a game in Memphis costs that player more than 86 percent of his salary for that day.
I’m not totally against local governments – which, in nearly every case, provide public funding to arenas – recouping some of that invested money via taxes (though the governments could just simplify the process by no longer providing public welfare to billionaires). I’d prefer those taxes were levied on the owners who make the profits, but if the government took the money from owners, player salary would drop, and the effect would be similar.
Except the money doesn’t go to the state — another of Tennessee’s jock tax quirks. It goes to the operators of the Grizzlies’ arena, who happen to also own the franchise, Klempner says. The state doesn’t see a dime, at least not directly. The theory is that arena operators will use the extra cash to spruce things up, draw more celebrated acts, and spend in other ways that will ultimately bring more visitors and money to the Memphis area.
“The state is collecting this money on behalf of a private entity,” Klempner says.
Oh. Well, that doesn’t seem reasonable at all.