As the old saying goes, you learn something new every day. Even if it’s something rather nauseating.
Over at Reason, Eric Boehm has a deep dive into a subject which most of us probably weren’t aware of and, sadly, quite a few probably won’t care about. It’s the fact that the players on the Philadelphia Eagles and, to a lesser extent, the New England Patriots, are about to be hit with a significant tax bite. No… I’m not talking about the fact they have to file a tax return like everyone else and they make millions of dollars per year. That’s all well known.
What I didn’t know was that a number of states, including Minnesota where the big game was played, have very special “jock taxes” which are only charged to visiting professional athletes. And even though it’s a state tax, it can take a bite which isn’t that far behind what Uncle Sam gets for their federal taxes.
Because the game was played in Minneapolis, the $112,000 bonuses paid to each player on the winning team (and the $56,000 bonuses paid to the losers), will be taxable in Minnesota, which has some of the highest personal income tax rates in the country. Each member of the Eagles will end up paying about $7,200 of their Super Bowl bonus to the state of Minnesota. That comes on top of an estimated $23,500 federal tax hit for each of the winning player’s shares.
And that’s just the start. Minnesota also imposes a so-called “jock tax” on athletes that visit the state for practices and games. Income earned during the days leading up to Sunday’s big game will be taxed at the state’s top marginal rate of 9.85 percent. Only California has a higher jock tax, and even states with no personal income taxes—like Texas and Florida, both frequent Super Bowl hosts—still hit up professional athletes, coaches, and team staff with special taxes.
This is apparently a big deal in the sports world. Even though most of those players likely make their homes (and pay their taxes) in Pennsylvania or Massachusetts, the fact that they earned those large bonuses for a game played in Minnesota means they’ll have to pony up that cash. But as Boehm goes on to note, it’s not just the bonuses we’re talking about here. The guys are on the payroll for each day they spend in the state practicing prior to the game and most of them were there for a week. He estimates that Tom Brady will wind up owing as much as $43K for the week he spent there and he didn’t even get to go home with a new ring for his collection.
Yes, it’s easy to scoff and say that you don’t feel much sympathy for people who are paid such vast sums of money to play a game. I can relate. But that’s really not the issue here. This is a question of right and wrong. In a previous job, I had to go to locations in other states and stay while doing research and writing. I know of one year where I’m sure I spent a total of at least two months of the year in Tennessee. But never once did anyone suggest that I owed any special taxes to the state. All my taxes were paid in my home state. That’s the same for everyone I happen to know.
How do these states get away with this? It’s an income tax, right? Those players don’t live in the state and their employer is not based there. How can an income tax be levied on them? And this apparently only applies to people in one specific set of occupations. Has anyone ever challenged this in court? It just doesn’t sound as if it should be constitutional.
Or is this one of those cases where the pro athletes are simply too embarrassed to complain? On some level, perhaps that’s justified. But it still doesn’t make it right.