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Wednesday, February 01, 2006
SuperBowl Players Stuck Up in Michigan For $200K

The state of Michigan and city of Detroit, both of whom are in desperate need for revenue, are taxing the participants in this Sunday's SuperBowl. Because they work in the state on that day, the players have sufficient contact with the state and are thus subject to income taxes. Additionally, they increase the rate for nonresident athletes, the "jock tax".

They are neither the first nor the only. The word is, California first imposed this type of tax in the early 90s, targeting the Chicago Bulls. Illinois reciprocated in an attempt not to raise revenue but to "protect our athletes". Of the 24 states that have major professional league sports teams, 20 of them impose an extra tax on athletes, with rates almost as high as 10%. Michigan's rate is actually among the lowest. Washington state does not have an income tax and no jock tax. But that may change according to a Washingtonian legislator.

According to the Tax Foundation, "The principles of sound tax policy dictate that taxes be neutral, fair and levied on the broadest base possible. A tax, such as the jock tax, that is levied on just one group of people violates all these tenets. " Also, in some states the statutory language permits the extension of this tax to others for whom it was arguably not intended: the low- to mid- salaried cameraman, etc. It is even being extended into other professions, such as (gasp!) nonresident lawyering.If they come after the lawyers, we'll finally see how these taxes stand up against the Privilegs and Immunities Clause. (I have no idea whether this challenge has already been undertaken.)

According to FreedomWorks, here are some other "ridiculous" taxes:

10. The Amusement Tax (Most States)
9. Fountain Soda Drink Tax (Illinois)
8. Fur Tax (Minnesota)
7. Take-Out Tax (Chicago, Washington, D.C.)
6. Blueberry Tax (Maine)
5. Playing Card Tax (Alabama)
4. Sparkler and Novelties Tax (West Virginia)
3. Jock Tax (Many States)
2. Facial Hair Tax (Massachusetts)
1. Illegal Drug Tax (Alabama, North Carolina, Nevada)

Andre Smith
(Much info for this post was gathered at the Tax Professor Blog,


This may or may not be relevant, but NFL players do not earn a salary for the SB. Their salary (generally) is paid out in 17 equal weekly installments over the course of the regular season. Playoff money is a set amount that depends on the game played, and for the SB, whether you win or lose. This is treated as a benefit under the CBA.

Anonymous Anonymous -- 2/02/2006 10:21 AM  

You are correct about the salary. But for tax purposes (federal, state and local) it doesn't matter how compensation is characterized, it is income nonetheless--even if it is not paid in case, even if it is for you but you have them give it to a charity. All "accessions to wealth" in any form are subject to tax.

Anonymous Andre Smith -- 2/02/2006 11:37 AM  

The illegal drug tax? Please explain. So, Pablo Escobar has to charge an extra $1,000 for a kilogram of cocaine in those states? Hmmm.

Anonymous Que891 -- 2/02/2006 11:52 AM  

Believe it or not, yes. The U.S. and its states have the authority to lay excise taxes on the privilege of transferring goods (even illegal ones) and income tax on the receipt of income even if it is illegal. Al Capone went down on tax charges. Frequently, when the government doesn't have enough proof to charge someone with a crime (securities fraud, drug dealing, whatever), they will charge them criminally with tax evasion and also recover illgotten gains through the civil tax suit, where the government will seek the tax, interest, negligence penalties, failure to file penalties, substantial understatement penalties, and civil fraud in addition to the criminal fraud).

Anonymous Andre Smith -- 2/02/2006 12:50 PM  

This is one of my biggest problems with tax law (from a legal perspective, not a social one). In essence, you can be double punished for illegal activities -- for both the underlying activity and for failing to report the income. But reporting the income is not a violation of the Fifth Amendment self-incrimination clause. I am not in favor of making it easier for criminals to hide illicit income, but it seems like there is a disconnect here under current legal principles.

Anonymous Greg Skidmore -- 2/02/2006 4:15 PM  

What about this for a federal law to fix the "jock tax": The only state or territory which can collect tax on pro athletes' salaries, benefits, etc., is the one where the athlete plays his or her home games. That solves the problem of a neutral state (Michigan in this case) trying to extract taxes from two teams from out of state (PA and WA) or, say, CA from getting taxes from a team in, say CO. It would also solve the
potential problem of filing and paying taxes in a dozen or more states every year.
(I realize this may have problems--constitutional, what about teams who play home games outside the U.S., what about states w/no income tax [WA in the example above], or multiple sites [i.e. New Orleans/Oklahoma City Hornets, New Orleans/San Antonio Saints, etc.]. Suggestions welcome!)

Anonymous Melvin H. -- 2/04/2006 6:01 AM  

Thx for the info.

Steve @

Anonymous home income -- 2/25/2006 11:30 AM  

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