Detroit Codifies ‘Jock Tax,’ First to Include Travel Days

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By Che Odom

Detroit will be taxing professional baseball, football and hockey players this year for games played in the city under a new “jock tax.”

The tax is the first in the U.S. to count travel days that don’t otherwise include service inside the city, Sean Packard, tax director at the sports agency Octagon Financial Services, told Bloomberg BNA. “This is detrimental to the players.”

Detroit, like most cities that have an income tax, already had a “jock tax” in place—but Detroit’s tax wasn’t codified until March 1. The ordinance provides guidance to teams and players on how to allocate income.

Detroit’s ordinance is generous toward pro athletes in that it excludes signing-bonus income, but its tax on travel days is unusual, Packard said.

“Overall I think this is a well thought out and well detailed piece of legislation,” Packard said. But, “I really do not like that they tax travel days in which no team meetings or practices take place.”

Cleveland, Cincinnati, Columbus, Kansas City, Mo., Philadelphia, Pittsburgh and St. Louis are among cities that tax visiting professional athletes.

Last year, the Ohio Supreme Court voided part of Cleveland’s system of levying a 2 percent tax on visiting NFL players’ salaries based on the number of games played in a season rather than the number of duty days spent in the city.

Taking More Money

In 2014, Detroit came out of its record $18 billion municipal bankruptcy, with state and local officials attempting to rebuild the city after decades of population decline and industrial decay.

Michael LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center for Public Policy, told Bloomberg BNA that the “jock tax” is another example of the city attempting to tax its way out of trouble rather than curtailing its spending.

“This doesn’t surprise me at all,” LaFaive said. “The city of Detroit has an insatiable appetite for other people’s money.”

Calls to the mayor’s office and the city attorney weren’t immediately returned.

Based on Season, Not Calendar

As far as taxes go, the Detroit jock tax is pretty fair, and unique in a handful of ways, Packard said. In addition to including travel days, the city’s tax is based on the season, rather than calendar year.

“This is unique only to Detroit,” Packard said. “It has its benefits but also its problems,” potentially causing administrative headaches.

Guidance included with the ordinance outlines the benefit for hockey players who finish one contract and sign a huge contract for the next season—or take a drastic pay cut, he said.

“Depending on when the games are played, a player could either benefit or lose under the normal, calendar day method,” he added. “Detroit’s method of calculating income is more fair across the board to the players and to the city.”

To contact the reporter on this story: Che Odom at COdom@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

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