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Tennessee's privilege tax draws criticism from Detroit's Brian Rafalski

The Canadian Press (via The Hockey News) is reporting this evening that Detroit Red Wings defenseman Brian Rafalski is complaining about Tennessee's new "privilege tax" which hits professional hockey and basketball players for $2,500 per game (with an annual limit of $7,500).

The Red Wings star has been running the numbers, and he estimates 17 teammates will be paying more money in taxes to face off against the Nashville Predators on Saturday night than they will earn for playing the game.

"My complaint with it is ... 17 teammates will be paying money out of their own pocket to play in Tennessee. It's a tax rate of over 100 per cent," Rafalski said Friday.

Follow after the jump to see how this shakes out, as we discussed this new tax last summer when the Tennessee legislature put it in place...

Star-divide

There are 193 days in this NHL regular season, and players are basically paid "by the day". Let's use forward Drew Miller as an example. His salary this season is $525,000, working out to a daily rate of $2,720 (per CapGeek).

Tomorrow, let's first subtract the escrow that all NHL players are paying this year (recently 18%). Then, the state of Tennessee will dock him $2,500 for playing.

It's pretty easy to see how he comes out having "paid to come to work" tomorrow, and that's before we've even got to federal income and other taxes.

As to why this doesn't hit the NFL's Tennessee Titans and their visiting opponents, apparently the NFL already had rules in place that would have penalized the state if they had enacted such a tax on football players.

I know, that's as stunning as it sounds.

At the time, Nashville Predators captain Jason Arnott declined to voice much opposition to the measure; in part, I'm sure, because from a PR standpoint it was an impossible position, as the economy was melting down, for a professional athlete to complain about it. Also, the Preds have previously enjoyed the lack of income tax here in Tennessee. The state is proud of the fact that it doesn't have an income tax, so in order to relieve some budget pressure they came up with this "privilege tax" which walks like an income tax, and talks like an income tax, except for the fact that it's targeted specifically at NHL and NBA players.

Is this privilege tax an arbitrary cash grab from a politically easy target? Absolutely. Getting it repealed is probably out of the question as the overall economy continues to struggle, but surely they should come up with a graduated scale based on the athlete's salary. We want visiting NHL players to view a trip to Tennessee as a losing proposition on the ice, not in the wallet.

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wow.

i had no idea about this. how exactly can a state tax a person not employed in the state coming in for a night and then leaving. makes as much sense as taxing a pilot for landing at any airport in any city, just ridiculous.

by flyalder on Mar 26, 2010 11:24 PM EDT reply actions  

i got an idea

a privilege tax that taxes any politician making more than $60,000 a year at a rate of 200%

by flyalder on Mar 26, 2010 11:26 PM EDT up reply actions  

Insanity

That tax is complete, 100% BS – unfortunately, it’s also par for the course. My vote would be to put the authors of the bill on a hard-labor chain gang for about 10 years. I would absolutely love that. Unfortunately, taxes, fees, levies, penalties, etc. are only going to get worse for everyone. Local, state and fed gov are totally out of control with new taxes coming from every conceivable angle. If it moves, tax it and tax it hard.

by blueline on Mar 26, 2010 11:29 PM EDT reply actions  

Actually, critical analysis of current taxation process pretty simple per someone I wish were not gone: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

by blueline on Mar 27, 2010 12:04 AM EDT up reply actions  

The idea of a tax is reasonable

This is standard practice in most professional sports. However the application is all wrong. The tax should be a percentage of the players salary up to a maximum amount, say $2500. That way players who don’t draw a large salary aren’t unfairly penalized, as are the 17 Detroit players. I find it hard to believe that the “Tennessee Legislature” didn’t realize this. As an out of stater, are they related to the Metro Sports Authority? Geez.

by jerseypredsfan on Mar 27, 2010 12:06 AM EDT reply actions  

Terrible. Absolutely a terrible raw deal.

Imagine if the NHLPA had any power or leadership, this would be a very big deal and a very big problem.

by HockeyJoe on Mar 27, 2010 12:47 AM EDT reply actions  

Not that I agree with this tax, but...

Comparing a player’s salary per 365 days to the tax per game is a little misleading since players obviously don’t play every day of the year. In other words, even if hockey players had to deal with this tax all 82 games of the year, they would still make plenty of money. But it does seem way too high.

Also, is the NFL above the state government?

by Lil cutie on Mar 27, 2010 12:45 PM EDT reply actions  

The players aren’t paid 365 days a year. Their daily salary is based on the days in the regular season (this year, that’s 193). For a relatively low-paid, visiting player who comes to Tennessee for just 3 days in a season, on those days he’s losing money for coming to work.

More fun than a stick to the face!
On the Forecheck is SB Nation's blog covering the Nashville Predators.

by Dirk Hoag on Mar 27, 2010 2:14 PM EDT up reply actions  

Ah, I wasn’t aware of that. So assuming the tax were levied on every game of the year, 82 of the 193 days Drew Miller would only make 220 dollars. The rest of the days (111) multipled by his daily pay ($2,720) equals 301,920. Add this to the 220 dollar game days (220*82=18,040) equals a 319,960 dollar salary before taxes. So he’d still be making out okay, but a large chunk would be gone.

by Lil cutie on Mar 27, 2010 5:47 PM EDT up reply actions  

Just to clarify, this tax has a maximum $7,500 annual limit. So for Central Division opponents who come in three times a season, they get nailed on those three days. The Preds themselves also get nailed for three games.

More fun than a stick to the face!
On the Forecheck is SB Nation's blog covering the Nashville Predators.

by Dirk Hoag on Mar 27, 2010 7:14 PM EDT up reply actions  

Red Wing Fan, posting in peace

FYI, a few years back the City of Detroit began taxing out of town athletes at the non-resident tax rate of 1.25%,the tax based on 1/82 of the player’s wages in the case of NHL players.

Using the salary of $525,000 as an example, 1/82 of that amount would be $6,402, so the one game tax would be about $80. So a Predator at that salary would pay about $240 each season to the city of Detroit if he played all 3 regular season games there.

And yes, I think the NFL believes they are above local, state and federal governments

by mc keeper on Mar 27, 2010 1:43 PM EDT reply actions  

That kind of income tax is very common (that’s what Rafalski refers to as paying tax in 15 different states). The difference here is twofold:

1) Because this isn’t an income tax, the players aren’t allowed to take a deduction against their other taxes.

2) The scale of this tax is pretty absurd compared to others, like the example you cite above.

More fun than a stick to the face!
On the Forecheck is SB Nation's blog covering the Nashville Predators.

by Dirk Hoag on Mar 27, 2010 2:16 PM EDT up reply actions  

Allan Walsh just posted a link to this article on twitter. He was talking about the tax in his previous tweets

Cheers, Complaints, homerism and bashing of mediocre pop musicians in 140 Characters
"DO NOT get stuck behind Kyle Wellwood in the buffet line. This isn't really etiquette, but it will prevent you from starving to death"- Down Goes Brown on Etiquette for Jason Spezza's wedding

by Kevin Sellathamby on Mar 31, 2010 7:23 PM EDT reply actions  

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