Jock tax
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In the United States, the jock tax is the colloquially named income tax levied against visitors to a city or state who earn money in that jurisdiction. Since a state cannot afford to track the many individuals who do business on an itinerant basis, the ones targeted are usually very wealthy and high profile, namely professional athletes. Not only are the working schedules of famous sports players public, so are their salaries. The state can compute and collect the amount with very little investment of time and effort.
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[edit] In depth
The following is an in-depth analysis of modern day examples and criticisms of the jock tax.
[edit] Example
After the 2000 Major League Baseball season, Alex Rodriguez signed what was then the largest contract in American sports history, a ten-year contract worth $252 million, with the Texas Rangers. The tax collecting authorities of other states were notified alongside the public, and would separately demand that Rodriguez's employer withhold the tax due from his salary and remit it to each of them. Even though the state of Texas did not have an income tax, he still had to pay the various state income taxes applied to each away game in each location. It is estimated that Rodriguez paid $520,000 a year for state income taxes outside his own state.
[edit] Criticism of the "jock tax"
In 2003, the Tax Foundation conducted a study on the jock tax. It concluded that the tax is:
- Poorly targeted
- Arbitrarily enforced
- Unrealistically burdensome
According to the foundation, the jock tax "forces traveling professionals to file potentially dozens of state and local income tax returns annually." The foundation argues that the jock tax is poor tax policy.
The jock tax also violates the concept of "no taxation without representation". The taxpayer has no right to vote for representatives that would represent his/her interests with respect to being taxed. The new wrinkle is "multi-state" income tax for people who work for one company in multiple states. If you work 20 days or more in a given state, you pay state income tax on what was earned in that state and bear the burden of filing another state income tax return. The filing burden may be very costly compared to what was earned in that brief work period.
[edit] See also
[edit] Further reading
- West Federal Taxation: Individual Income Taxes, 2005 Edition, Thomson South-Western.
