Pro athletes say they’re ready to go to court over Tennessee’s tax on hockey and basketball players. At a hearing Thursday, lawmakers listened to arguments for and against repealing the state’s so-called “jock tax,” which is the highest in the nation by most measures.
“It’s like a kid coming to school, the littlest guy at the school, and somebody’s just picking on him and taking his money,” Tony Allen of the Memphis Grizzlies said.
It’s hard to feel sorry for Allen, who just signed a $20 million contract. But he says he’s looking out for the estimated 75 NBA players who effectively lost money to play in Memphis this year.
Twenty states tax professional athlete salaries, but most use a percentage. Tennessee’s levy is a straight fee – $2,500 per game with a cap of $7,500. That goes for both home and visiting teams.
According to the NHL Players Association, 43 percent of athletes don’t even make $2,500 per game.
“I believe the Tennessee statute is so excessive that I am absolutely convinced that a challenge will be successful,” Steven Kitter told lawmakers. He’s an attorney who advises player unions.
If the state doesn’t get rid of the tax that was hastily passed at the end of the 2009 legislative session, Kitter says a judge might even force the state to reimburse the $14 million that’s been collected.
The money has effectively gone to the respective team ownership groups, which have management organizations to run their city-owned arenas. The funding is supposed to go toward attracting concerts to the facilities through subsidies, though lawmakers note there is very little public accountability for how the money gets spent.
The organization that owns the Memphis Grizzlies and runs the FedEx Forum has been vocal about keeping the revenue stream. The Nashville Predators have been more quiet, mostly because hockey team owners agreed to support repealing Tennessee’s jock tax in the latest player contract. The league even said it would pay players’ tax bills.
Sen. Jack Johnson (R-Franklin) is the sponsor of a bill that would end the pro athlete privilege tax, but he says he understands why the arena management groups feel like the rug is being pulled out from under them.
“Rather than repeal, don’t repeal,” he said. “There may be an avenue in the middle that might be more fair.”