Lawmakers weigh Tennessee's jock tax

8:21 PM, Jul 25, 2013   |    comments
Former NHL player and present day NHL Players' Association as special assistant Mathieu Schneider testifies at a hearing on the state's jock tax Thursday afternoon in Legislative Plaza, July 25, 2013 in Nashville Tenn. The state's jock tax is the highest in the country, $2,500/ game. / Samuel M. Simpkins / The Tennessean
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By Chas Sisk / The Tennessean

The NBA, the NHL and the Tennessee legislature may all be in their offseasons, but they each took time Thursday to take up a subject that never takes a vacation - money.

Representatives for the Memphis Grizzlies, the National Basketball Players Association and the National Hockey League Players Association appeared at a hearing in Legislative Plaza on Tennessee's "jock tax," a surcharge of $2,500 per game levied on pro basketball and hockey players.

The state's jock tax has become a widespread gripe among NBA and NHL players, in part because the proceeds go directly to team owners. They also say the tax - by some measures, the highest in the U.S. or Canada - means players at the bottom of their league's pay scale wind up paying more in taxes than the receive in wages for playing in Tennessee.

"Because of this tax, 43 percent of the players in the league have to pay out of pocket when they play in Tennessee," Mathieu Schneider, a 20-year NHL defenseman who now works for the players' union, told state lawmakers. "If other states in the U.S. and other provinces in Canada decided to tax hockey players in the same fashion, the National Hockey League as we know it would cease to exist."

Tennessee lacks a state income tax, but it does charge a number of professionals, such as dentists, lawyers and stockbrokers, a "privilege tax" of $400 a year to ply their trade. In 2009, Gov. Phil Bredesen and state lawmakers agreed to extend the privilege tax to NBA and NHL players as a way of raising money for municipal arenas.

The tax, which does not apply to NFL players, was set at $2,500 per game, with a maximum cap of $7,500 a year.

The sum does not cause much duress to superstars making salaries in the tens of millions, opponents of the tax concede. But the tax can take a bite out of the paychecks of those making their league's minimum.

A rookie at the bottom of the NBA's wage scale makes about $490,000 a year, which works out to about $6,000 a game or $2,200 a day. The figures are similar for NHL players who make the league minimum of about $500,000 a year.

Proceeds from the privilege tax go to the Nashville Predators to subsidize operations at Bridgestone Arena and the Grizzlies to subsidize the FedEx forum in Memphis.

Predators officials did not attend Thursday's hearing. NHL owners agreed as part of the most recent collective bargaining arena to work for the repeal of Tennessee's jock tax.

But the Grizzlies' chief operating officer, Jason Wexler, defended the tax. He said the money helps the FedEx Forum attract events other than basketball, including concerts, and reduces the debt on the arena.

"The incentive is working as planned," he said. "It's reducing risk to the city of Memphis and to Shelby County, who are responsible for the bonds, and it's creating revenues."

A handful of state lawmakers took part in the hearing, which lasted about 90 minutes. They expressed some concerns about the fairness of the tax, noting that it does not apply to NFL players or entertainers, but they also conceded that the Predators and the Grizzlies depend on proceeds from the tax.

State Sen. Jack Johnson, the Franklin Republican who sponsored a bill to repeal the jock tax this spring, said he was not sure he would push such legislation again in the spring.

"I think it's safe to say the NBA players association and the NHL Players Association will continue their efforts," he said. "At the end of the day, I'm hoping the parties can get together and negotiate a solution that will be agreeable to them."

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