Ohio Supreme Court Calls A Foul on Cleveland’s Jock Tax

Published May 7, 2015

On April 30th, former Indianapolis Colts center Jeff Saturday and former Chicago Bears linebacker Hunter Hillenmeyer likely did end zone dances that would make Chad Ochocinco blush.  Their cause for celebration was the Supreme Court of Ohio’s ruling that the city of Cleveland must return a few thousand dollars of income tax to each of their bank accounts.  While their multi-million dollar NFL salaries dwarf the refund checks, the ruling was a moral victory for these gridiron veterans.

Jeff Saturday’s lawsuit provides the clearest picture of the problem.  The Colts played one game against the Browns in 2008, and Cleveland’s income tax was withheld from Saturday’s paycheck for that game—despite the fact that he had remained home in Indianapolis for physical therapy!

The policy in question is the so-called “jock tax,” which allows Cleveland to collect income taxes on the earnings of any professional athlete who plays in the city.

Jock taxes are not unique to Cleveland.  According to the Plain Dealer, Cincinnati, Columbus, Detroit, Kansas City, Philadelphia, Pittsburgh, and St. Louis all levy jock taxes.  However, the Ohio Supreme Court decided that Cleveland’s method of assessing the jock tax is unconstitutional.

The justices unanimously agreed that while Cleveland may tax out-of-state athletes for the portion of their incomes earned within the city, Cleveland may not tax any portion of their incomes that were not earned within the city.  Previously, Cleveland’s method of assessing the jock tax did, in fact, fall on income earned outside of the city limits.

This overreach violates The Buckeye Institute’s tax principles of simplicity and fairness.  The jock tax is difficult to calculate because it must be apportioned properly to the athlete’s share of income earned in each city and must be calculated for many different jurisdictions.  The city’s income tax also exempts the first 12 days of income earned in Cleveland—except for certain people like athletes and entertainers.  This is fundamentally unfair because it places different tax burdens on taxpayers with similar earnings.  More importantly to the justices, Cleveland’s implementation of the tax violates the due process clause of the United States Constitution.

The Ohio Supreme Court did not eject the jock tax from Cleveland’s tax game entirely.  Instead, Cleveland must revise their game plan so that the jock tax stays in bounds, although city tax officials estimate that such changes will result in a loss of about $1 million of revenue per year.  Regardless, the ruling will go down as a win for all out-of-state athletes who play in Cleveland, and for all proponents of fair and simple tax policy

Joe Nichols ([email protected]) is a policy analyst for the Buckeye Institute for Public Policy Solutions.

An earlier version of this article appeared at http://buckeyeinstitute.org/the-liberty-wall/2015/05/05/ohio-supreme-court-calls-a-foul-on-clevelands-jock-tax/. Used with permission of the Buckeye Institute for Public Policy Solutions.