All-Star Earnings Taxes
Sunday’s Post-Dispatch had a good article about a planned attempt by the St. Louis city collector’s office to apply the city’s 1-percent earnings tax to the baseball all-stars playing in St. Louis next week. (For which, by the way, I am lucky enough to have a ticket.)
One of the Show-Me Institute’s very first articles was about the lunacy of “jock taxes” like this. The city intends to tax 1 percent of the earnings of every player who earns an all-star bonus. So, for example, Albert Pujols would owe $500. (Although because Albert lives in Missouri, and plays full-time in the city, he might not be the best example.)
According to the article, there is a strong argument to be made against taxing the bonuses, and at least one city that has a “jock tax” recently chose not to tax all-star bonuses for that reason:
That’s the stance taken in Pittsburgh, which hosted the All-Star game in 2006. Pittsburgh has a 3 percent “usage fee” on the salaries of visiting athletes and entertainers, but officials ruled the bonuses were performance incentives, not pay for actually appearing in the All-Star game.
In other words, it wasn’t earned in Pittsburgh, and it can’t be taxed there, said Tim O’Donnell, with the Pittsburgh Finance Department. “Put it this way: To get selected, you’d better be playing good beforehand,” O’Donnell said.
I would love to see a player challenge this attempt and put a dent in earnings tax collections. The city of St. Louis should not be expending time and effort to collect 1 percent from everyone who sets foot in the city. (Trial lawyers who office outside the city, but benefit from city venues, are another story. They should pay a 20-percent tax on those cases — and I am only half-joking.)
One a related note, the economic benefits that come from hosting the all-star game are going to be terrific for the city, and I can’t wait to be a part of it.