A consistently cited attraction of moving to Tennessee is the general freedom from personal income taxes; moving here from most states is an automatic raise – unless you play for the Nashville Predators or the Memphis Grizzlies.
Then you get the privilege of paying the state $2,500 per game played in our arenas (the tax is capped at $7,500 a year, to limit home team player costs).
It is an important source of revenue for the teams, as Grizzlies Chief Operating Officer Jason Wexler told the state legislature during a hearing last week.
“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.”
And it affects only a few people, so it is easy to dismiss complaints from the players – right? They make plenty of money. Sure.
Yet, we can empathize with these players when they say they are glad that it is only Tennessee that slaps them with the privilege tax. If every arena charged the players like we do, a hockey player would pay more than $100,000 a year to ply his sport.
The tax applies only to NHL and NBA players. NFL players are not taxed; musicians playing in the same arena are not taxed; other entertainment workers are not taxed.
So, in a business-friendly state, and in Nashville, a city that is actively courting the creative class, is this an appropriate revenue strategy?
The “jock tax” was an extension of Tennessee’s $400-a-year privilege tax that accountants, architects, attorneys, chiropractors, dentists, physicians, psychologists, speech pathologists, stockbrokers and other professionals are required to pay.
The arbitrary nature of tax laws notwithstanding, it seems particularly strange that these tax revenues flow to team owners, and that the privilege of playing hockey or basketball is taxed at such a greater rate.
If, and it is a big if, we think that privilege taxes are a good way to raise revenue, then professionals of all classes should be treated equally and taxed accordingly – or not at all.