The Pressure American States Put on Athletes and Remote Workers

Sports is big business in America, with the country’s four largest professional leagues bringing in over $45 billion in revenue each year. This not only leads to richly paid stars, but also income-generating opportunities for governments. One way that states and cities have attempted to capitalize on the earnings of visiting athletes is through the implementation of the “jock tax”.

The jock tax gained attention back in 1991 when California taxed the victorious Chicago Bulls after defeating the Los Angeles Lakers in the NBA finals. Not to be outdone, Illinois followed up with the “Michael Jordan’s revenge” tax. Other states soon joined in, much to the delight of the public, as it was seen as a way of not only taxing the rich but also hitting the despised rivals of much-loved home teams.

However, a recent ruling in Pennsylvania may signal the end of the most egregious jock taxes. The city of Pittsburgh had been charging non-resident athletes a 3% fee for using its baseball, football, and ice-hockey facilities, while resident athletes only paid a 1% income tax to the city. On January 10th, a court struck down the levy, finding that it violated the state’s constitution. Similar taxes have been revoked in other states as well. This has been seen as a significant step in preventing discriminatory taxes on athletes.

While this ruling may mark the end of the most extreme jock taxes, state income taxes still apply to any income earned within the state, including by non-residents. Athletes, whose schedules are publicized, are often singled out and taxed at a higher rate than other workers. For instance, California is estimated to bring in over $200 million a year from taxes on non-resident athletes.

Taxation based on the location of work rather than residence does not mean an extra levy, but does result in a more complex filing process. Athletes may need to file multiple tax returns in different states. In an era of remote work, this issue is becoming more widespread, as workers who straddle locations are also required to file multiple tax returns.

To simplify tax-filing for athletes and entertainers, some states have introduced tax-filing thresholds. For example, Montana exempts non-residents if they work there for fewer than 30 days. Despite these efforts, it seems unlikely that pro athletes will get a break anytime soon.

The plight of athletes regarding taxes is emblematic of the challenges many taxpayers face in this era of remote work. It’s a magnified version of what many taxpayers deal with. The complexity of the tax system, especially for non-residents and those who work in multiple states, is an issue that continues to present challenges.

For more expert analysis of the biggest stories in economics, finance, and markets, be sure to stay tuned for our next issue. We’ll keep you updated on all the latest news and trends.

Source link



Leave a Reply

Your email address will not be published. Required fields are marked *

Most Viewed

Featured Franchise Opportunity

MilliCare Franchise

Cleaning Franchises, Low Cost Franchises

$10ˌ000 - $50ˌ000

Buffalo Wild Wings

Food & Beverage Franchises, Full Service Restaurant Franchises

$250ˌ000 - $500ˌ000