The name says it all – it is just that, a tax on athletes. Well, at least it started out that way. The Jock Tax has its beginning in 1991 in California, when Michael Jordan beat the Lakers in the NBA finals. California decided they wanted to tax Jordan for his wages while in the state of California as earnings in California. Illinois then came back with their “Michael Jordan’s Revenge” Tax, stating that they would impose the Jock Tax on any state that imposes a Jock Tax on their players.
More states took to the tax as it could not be voted out by the visiting players, due to their not being a resident. Missouri came on board with the tax in 2009 when the Cardinals lost to the Astros in the postseason, but took it another step further. A representative of the state was disappointed in how the umpires officiated the games in St. Louis; therefore, Missouri has imposed the tax on umpires that are working the games in their state.
How could taxing these pros that make millions of dollars sound bad? Well, the tax is also levied on team trainers and equipment managers, whom only earn a median income. Teams travel to fair amount of states and these trainers end up having to file 15-20 state tax returns, and the cost of having that many returns prepared piles up in a hurry.
In 2015, there was a court case in Cleveland involving two former NFL players regarding the Jock Tax. Cleveland was trying to levy the tax as if the only days that the players had worked in the state of Ohio were game days. Therefore, 5% of their salary was being taxed for playing a game in Cleveland, but the players claimed that they worked throughout the week at practice and video training; claiming that a typical NFL season is 170 workdays long for the players. The Ohio Supreme Court ruled in the favor of the players, stating that the tax being levied by Cleveland was “Unconstitutional.”
As of today there are only four states that have professional teams that don’t impose the Jock Tax: Florida, Washington, Texas and Tennessee (who repealed their version of the Jock Tax in 2014). All four states also have no state income tax, explaining why you see many professional athletes living in these states.