March 10, 2015

SportsFilter: The Tuesday Huddle:

A place to discuss the sports stories that aren't making news, share links that aren't quite front-page material, and diagram plays on your hand. Remember to count to five Mississippi before commenting in anger.

posted by huddle to general at 06:00 AM - 8 comments

A brief but interesting look at state income taxes for players as they enter free agency, using the NFL:

Including preseason, a Jaguars player's income is subject to state income taxes at most 16 days out of the roughly 180 days that make up an NFL season, including training camp, OTAs, etc. That's only 8.89% of each player's income that could possibly be taxed by a state. Assuming the average road tax rate is 6%, the most a Jaguars player who lives in Florida can expect to pay in state taxes amounts to 0.53% of his income. That results in only $5,333 of state tax per million dollars of income or $53,333 on $10 million.

The Raiders are in California, where tax rates are as high as 13.3%, the highest in the land. One of its AFC West opponents is in California, meaning at least eleven of its games each year, including preseason, are in California. Accounting for training camp, Raiders players are subject to California's high taxes on at least 93.3% of their income. A Raiders player making $10 million will pay California of at least $1.215 million in state taxes in addition to taxes while on the road, without regard to tax deductions.

posted by Ufez Jones at 10:00 AM on March 10, 2015

That is most interesting. Couldn't help but notice that when Maurice Jones-Drew announced his retirement recently, he said he had consulted with his business people first.

Presumably, these are the same people that advised him that going from the Jags to the Raiders in free agency was a sound move financially. Perhaps the hometown allure trumped the tax concerns.

posted by beaverboard at 10:18 AM on March 10, 2015

I don't think MJD had a lot of options, given where he was at in his career when he could finally explore free agency. The Jags didn't want him any more because they were rebuilding under a new coach and GM.

posted by rcade at 10:27 AM on March 10, 2015

On the other hand, Calif. can tax Del Rio all they want.

posted by beaverboard at 01:50 PM on March 10, 2015

I'm not sure Mr. Packard's statement that players from a visiting team are subject to state income taxes is universally correct. I worked for a company in New Hampshire, which has no personal income tax. I spent a lot of time working for my employer in states that had personal income taxes. As long as my employment was considered as temporary with a fixed time limit, and I maintained my home of record in New Hampshire, I was generally exempt from paying any tax to the other state. Our accountants kept track of where I was working and the applicable laws. They would warn me were I remaining too long in one place, and they would then start withholding income tax as applicable. Suffice it to say, they never had to withhold any state income tax from me. Each state law is different, so Mr. Packard might well be correct for certain states, but what he has written does not apply everywhere.

My son is now employed as a state tax researcher, so I will ask him what he knows of the subject. His problem is that although he is a New Hampshire resident his employer is in Massachusetts. Thus he gets to pay his dues to the "Peoples' Republic".

posted by Howard_T at 03:06 PM on March 10, 2015

I was generally exempt from paying any tax to the other state.

It's different for athletes. A number of states have passed laws expressly capturing the income a player theoretically earns during a single away game.

posted by yerfatma at 03:37 PM on March 10, 2015

yerfatma is correct, with the additional nuance that there are also some local (city) laws that address this. There are also industry-specific tax laws in some cities and states addressing other performers, such as musicians. Here's a good run-down of an Ohio lawsuit challenging Cleveland's jock tax with some good background on the phenomenon.

posted by holden at 04:50 PM on March 10, 2015

I was unaware of cities and states singling out certain occupations for taxation while not charging others the same tax. I am not a lawyer, but what I do know from history is that laws that are unequally applied usually do not stand review by higher courts. I would bet that Hillenmeyer and Saturday have a decent chance of prevailing in the courts.

One sneaky thing to do might be to have one's agent research the tax laws of each NHL city and state. If such laws are on the books, have the agent get one's contract restructured so that games in those cities or states are paid at a very low rate, and the difference is made up in other games. If such contracts are allowed by the NFL, it could raise a bit of nasty with taxes.

posted by Howard_T at 09:57 PM on March 10, 2015

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