In a 2019 lawsuit, player associations from the NFL, MLB, and NHL challenged the jock tax enforced by the City of Pittsburgh. The Pennsylvania Commonwealth Court ruled that Pittsburgh’s fee on nonresident professional athletes was a violation of the state constitution’s uniformity clause.[1] However, the City of Pittsburg is now in front of the Pennsylvania Supreme Court, arguing that the jock tax should be deemed constitutional.[2]
The jock tax is a special tax that requires professional athletes to pay a tax on the income they earn outside of their home state.[3] This means that they pay state income tax on their weekly salary in whatever state they played in. However, it is important to note that the jock tax doesn’t just apply to professional athletes; it applies to anyone who earns money outside of their home state.[4]
Last week the City of Pittsburgh argued that the ruling of the Commonwealth Court was incorrect. Pittsburgh argued that the 3% jock tax “did not violate the state’s uniformity clause because both residents and nonresidents were being charged a 3% tax, even if the revenue goes to different places.”[5] Additionally, the city argued that the tax is not discriminatory to nonresident athletes because “Pittsburgh residents pay a 1% earned income tax and a 2% school tax, which the city said was equivalent to the 3% facility tax charged to nonresidents.”[6]
However, in the Commonwealth Court’s original ruling, they stated that the 2% school tax could not be imputed onto nonresidents, as they don’t get to enjoy the benefit of the schooling system, therefore the tax was discriminatory. Furthermore, this would mean that residents are getting taxed 1% to use the same facilities that nonresidents do, but the nonresidents are paying a 3% tax.[7]
The City of Pittsburgh is faced with justifying the city jock tax. The city has argued that “the 3% tax did not violate the state’s uniformity clause because both residents and nonresidents were being charged a 3% tax, even if the revenue goes to different places.”[8] “Pittsburgh said the state Supreme Court should review the case because it was an issue of ‘substantial public importance,’ calling into question the taxing authority of municipalities and would have an impact on municipalities across Pennsylvania.”[9]
The decision by the Pennsylvania Supreme Court could have a major impact on the tax rules all over the country. If the court deems the jock tax unconstitutional, this may lead to a domino effect of other cities around the United States stepping away from the jock tax. This would be a huge win for professional athletes of all types, as it would save them hundreds of thousands of dollars a year.
[1] ‘Jock Tax’ Is Constitutional, Pittsburgh Tells Pa. Justices – Law360
[2] Id.
[3] What Is the Jock Tax? – SmartAsset
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.