Jamie McGee of the Nashville Business Journal reports the NHLPA has put the Tennessee legislature on notice that unless the state’s “jock tax” is repealed, the union will take action to either get refunds for their players, or sue to get the tax overturned. NHLPA special counsel Steve Fehr is leading the charge:
“There are a lot of NBA and NHL players who could pursue claims to get their money back either through refund request or litigation,” Fehr said. “We’ve looked at it and we think it’s a viable case.”
As part of the Summary of Terms document (PDF) which governs the relationship between NHL owners & players this season while a new Collective Bargaining Agreement is finalized, the owners agreed to not only reimburse players for their costs under taxes like this, but also to lend their support to the NHLPA’s efforts to “challenge the legality and.or constitutionality of such taxes”.
So guess what, Tennessee legislators? You might be staring down the prospect of a Donald Fehr/Gary Bettman tag team!
Tennessee Privilege Tax Has Drawn Mixed Reactions
Back in 2009, the state of Tennessee instituted this privilege tax on pro basketball & hockey players, amounting to $2,500 per game played in the state (up to a maximum of $7,500). The NFL was exempted from this because, well, it’s the all-powerful NFL.
At the time, Nashville Predators captain Jason Arnott didn’t sound too concerned over the tax, as players are hit by a number of different state & local income taxes due to the number of different places they work in over the course of a year. In this blog over at The Hockey News from 2007, player agent Rand Simon laid out just how complicated the tax situation for a typical player can become.
In 2010, however, Detroit defenseman Brian Rafalski openly criticized the tax, which may not seem like a big deal to multi-million dollar athletes, but hits the depth players pretty hard, as I detailed back then:
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.
When you consider players who may not spend the entire season on the NHL roster, this tax could be especially nasty. There is a provision which protects players who were only on the major-league roster for 10 days or less during the tax year (PDF), but it will still hit late-season callups like Daniel Bang, Austin Watson and perhaps Filip Forsberg, too (welcome to North America, kid!).
The silliest aspect of this is that the money raised by the tax “is distributed to arena owners and has generated about $2.2 million in Nashville and $1.1 million in Memphis,” so the state is taking money from the players, sending it to the teams, and now the NHL is paying back their players to cover the cost. It seems like a massive waste of time & resources, and is probably well worth killing off.