This month, the Ohio Supreme Court agreed to hear a dispute between former Chicago Bears linebacker Hunter Hillenmeyer and the City of Cleveland over the constitutionality of the city’s special tax on high-earning athletes visiting the city to play sports.
Hillenmeyer — joined in his lawsuit by professional unions representing all four major U.S. sports — claims that the city errored by levying taxes on him for games played in Cleveland Browns Stadium between 2004 and 2006.
Ohio law prohibits municipal corporations from taxing the income of nonresidents working twelve or fewer days per year in that city — unless the individual is a professional athlete or entertainer.
Hillenmeyer’s complaint alleges that the so-called “jock tax” is unconstitutional, because it singles out professional athletes “for less advantageous tax treatment than similarly situated taxpayers,” violating the Ohio Constitution and the Fourteenth Amendment to the United States Constitution. He also says that Cleveland’s “games played” method of calculating the tax is unlawful.
The players’ associations, representing athletes in the National Basketball Association (NBA), National Football League (NFL), National Hockey League (NHL), and in Major League Baseball (MLB), wrote in an amicus brief that they object “to taxes that specifically target professional athletes for differential tax treatment solely because of their status as professional athletes.”
The result of this tax, they say, is that professional athletes are subjected to a tax from which nearly all other taxpayers are exempt, as players are being targeted for unequal treatment.
“Jock taxes” first originated in 1991, when California imposed a special tax on Chicago Bulls players visiting Los Angeles to participate in the NBA Finals that year. In retaliation, llinois imposed a “jock tax” of its own, setting off a flurry of new tax laws targeting professional athletes.
Currently, the only four jurisdictions with major professional teams do not impose a special tax on visiting players — Florida, Texas, Washington state, and Washington, D.C. In April 2014, Tennessee repealed its “privilege tax,” leaving the ranks of states imposing taxation on professional athletes’ work.
Lawyers for the State of Ohio, however, argue that professional athletes and other performers are an “easy-to-identify, high-end source of revenue that arises from a short visit to the city.”
The state’s filing claims that the taxation of visiting athletes is a “permissible rough proxy for what otherwise could be an income threshold for taxation on nonresidents who earn a sufficient amount of money during their short trips to the city.”
The government continues, arguing that it is perfectly rational to target this specific group of individuals while excluding other occasional entrants to the city, as it offers a convenience to other non-targeted, high-earning occasional entrants.
“While perhaps refreshingly candid,” the Players’ Association rebuts, “the State’s brief only confirms that Ohio’s decision to target professional athletes is not the product of reasoned policy considerations or any other rational choice.”
Supporters of the tax scheme argue that the targeted tax is fair, because professional athletes and their events “incur much larger public burdens relating to police protection and traffic and crowd control, among other public services.”
King James’ Tax
Academic research on the issue of targeted taxation of such classes of specialized workers seems to confirm the inequality of such government tax schemes.
In 2012, Pennsylvania State University Schreyer Honor College scholar Justin W. Taylor was inspired to study targeted taxation of athletes by the scrutiny of former — and now again, current — Cleveland Cavaliers sports star LeBron James’ decision to leave his team to play for the Miami Heat. One of the reported factors in James’ choice to leave the Cavaliers for the Heat was Florida’s more hospitable tax climate, relative to Ohio’s tax structure.
After modeling and studying the effects that “jock taxes” have on players and personnel from all 32 NFL teams, Taylor’s study concluded that “the biggest takeaway ‘jock taxes’ and professional sports do intersect is that the tax game is one competition that the players cannot win. The states make the rules, and some of them are winning big year after year.”
The Ohio Supreme Court has not yet scheduled oral arguments in the case. Hillenmeyer is seeking a tax refund of $5,062 from the city but has said the case is more about principle than money.
Paula Bolyard ([email protected]) writes from Doylestown, Ohio.
“The ‘Jock Tax’: Players Always Lose in an Unfair Game,” Justin W. Taylor, Pennsylvania State University Schreyer Honors College, http://heartland.org/policy-documents/jock-tax-players-always-lose-unfair-game