This treatise evaluates the evolution of a taxation tactic used by several state and local jurisdictions known as the "jock tax." This controversial method of taxation involves professional athletes and those associated with professional sport franchises paying taxes on money earned while working in a state in which the individuals do not reside. Implemented in the late 1980s and early 1990s, this form of taxation has added yet another way for some states to generate additional revenue. Specifically, this study examines the issues associated with implementing this form of income taxation including perceived monetary gains for local and state governments, limitations of enforcement, calculation variances, double taxation, and the impact on non-athletes. In addition, an extensive review of the legislative history of the Constitutional Clauses reveals potential violations of the Commerce Clause, Due Process Clause, Privileges and Immunities Clause, and Equal Protection Clause.
Most everyone knows about the two certainties in life: death and taxes; although, some Cubs fans would argue for a third with respect to their team's chances of never winning another World Series Championship. Of the three, however, it is the "certainty" of paying taxes that we seem to have the most control over (sorry Cubs fans). Or do we? The current tax structure in this country is convoluted at best and inequitable at worst. Who should pay taxes and how much one should pay are issues that have been debated for centuries in every forum from the kitchen table to the Halls of Congress. Some would suggest that citizens of this great land might as well agree to disagree over issues of taxes because no single answer can satisfy all "payers" involved. There are specific tax issues, however, that arise from time to time that are worthy of debate and should be examined more closely in order to establish or maintain a perception of equity. One such issue involves the state income taxation of nonresident athletes. The "jock tax", as it is more commonly known, is a plan implemented by most states which is designed to generate additional revenue by taxing visiting professional athletes and employees affiliated with professional sport franchises.
A BRIEF HISTORY
Prior to 1990, the only states and cities that taxed visiting team athletes were Detroit, California, Cleveland and Wisconsin. Cleveland has always imposed an earnings tax, which is withheld at the source and does not require the filing of a tax return, while Detroit has always required the filing of a tax return. While all resident team states have always taxed their nonresident players on the games played in the resident state (which is usually 50%), the aggressive taxing of nonresident visiting players did not begin until mid 1989, in the midst of the battle with the state of Wisconsin. One by one, with New York leading the way, states and localities began "to join the union" in taxing nonresident athletes, especially in light of the average baseball players salaries' increasing from approximately $350,000 in the mid 1980's to $1,084,408 in 1992 (MLB Salaries, 2009). The reason there was such a dramatic increase in player salaries is that there was extensive collusion among the Major League Baseball owners to keep the salaries low (Brown, 2006). While the highest paid player in the league in 2009, was paid in excess of 30 million per year, the average salary in 2009, was $3.24 million (MLB Salaries, 2009).
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming are the only states (and their localities), which do not impose a state income tax on individuals. Therefore, forty-one states are left to exercise their taxing power. Additionally, only four of the nine non-taxing states have professional major league sports teams.
ISSUES WITH IMPLEMENTATION
There are several issues with implementation of the so called "jock tax". …