Detroit defenceman Brian Rafalski says Tennessee is unfairly taxing professional athletes to play in the state.
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.
Paying taxes isn’t his issue. A total of 18 states now charge what’s commonly called a “jock tax” to make money off highly paid pro athletes visiting their teams. But Tennessee’s tax, which took effect July 1, 2009, is different from the other 17 because the visitors cannot get any relief through a deduction when filing taxes back home.
Tennessee, which does not have a state income tax, joined a handful of states in taxing professional athletes with what it calls a “privilege” tax that took effect July 1, 2009.
The tax was designed to tap into the wallet of anyone playing for an NHL or NBA team for more than 10 days in a tax period and within the state’s boundaries – the same way the other 17 states hit up pros who play for Tennessee teams. The NFL’s Tennessee Titans, based in Nashville, aren’t mentioned in the law. And this money heads back to the city of Nashville, home of the Predators, and Memphis, where the NBA’s Grizzlies play.
A spokesman with the NHLPA told The Associated Press on Friday that the players union has retained a tax expert to review the legal options in regards to Tennessee’s tax.
NBA and NHL players are hit for US$2,500 per game with a limit of $7,500 for a maximum of three games. With Rafalski playing in the Central Division, his Red Wings visit Nashville three times a season. Western Conference teams in the NBA visit Memphis only two games per season.
So Rafalski and his teammates wind up paying as much in Tennessee’s privilege tax – $7,500 per season – as any member of the NHL’s Predators or NBA’s Grizzlies even though they play up to 41 home games in the regular season alone. Rafalski said he has discussed the tax with Nashville defenceman Ryan Suter.
“It’s just not a fair tax,” Rafalski said.
The defenceman, who played for the U.S. Olympic team in February, said he estimated he pays taxes in up to 15 different states. Seeing the Tennessee tax withheld from his most recent paycheque didn’t help, and Rafalski said he thinks it pushes the limits of constitutionality because visiting athletes, at least from the NHL, wind up being taxed for income not earned in Tennessee.
He would like to see the Tennessee tax challenged legally and said he felt driven to speak up for his teammates, especially since he feels it hits younger NHL players the hardest.
“I am appalled you could have over 100 per cent tax rate on anyone. I understand times are tough. The power tax is the power to kill something. I feel strongly about it. It’s just the burden.”‘