The D.C. Council’s effort to impose a “jock tax” on out-of-town professional athletes who play games in the District may have been flagged for a false start.
Council members Harry Thomas Jr. and Jack Evans introduced a resolution in April to collect taxes from professional athletes who earn money in the District but do not live in the city — a common practice across the country.
But the folks at city hall needed a tip-in from D.C. Delegate Eleanor Holmes Norton on Capitol Hill to amend the District’s tax code within its home rule charter. The delegate introduced a bill May 25, yet it garnered no co-sponsors and has been sitting in a House subcommittee since June 20.
“It didn’t go anywhere,” said Andrew Huff, a spokesman for Mr. Evans.
Most states tax pro athletes for games at the state’s sporting venues because the athletes are technically working in the state’s jurisdiction. They are easy targets for the revenue generator because they are high-earners, everyone knows their salaries and their activities are easy to track.
Mr. Evans, Ward 2 Democrat, said he could tell the D.C. bill’s chances were slim, after feeling pushback from members of Congress — especially the delegations from Maryland and Virginia — and confusion among some of the local sports teams.
“Nobody quite understood what it was,” Mr. Evans said Tuesday, during the council recess that lasts until mid-September. “In the fall I might raise a flag again.”
Although it is appearing to be a Hail Mary pass, the D.C. bill could theoretically survive until it is either picked up by the committee or expires Jan. 1, 2013, when the 112th Congress ends.
Mr. Thomas, Ward 5 Democrat, has lobbied for the jock tax to no avail since early 2010. He brought up the issue again this year at a council breakfast — immediately after Mayor Vincent C. Gray introduced his fiscal 2012 budget plan April 1 — before partnering with Mr. Evans on the council resolution.
Mr. Evans has said the District could have gained as much as $5 million a year from the levy, a potential selling point in a city that has pitched creative revenue initiatives, such as a tax on live theater and online gambling through the D.C. Lottery.
Players who live in the District would be exempt from the proposed D.C. jock tax because they already pay D.C. taxes. Nonresident athletes would be reimbursed by their home states, a practice akin to a commuter tax, to avoid double taxation, Mr. Evans said.
Yet Mr. Evans, who serves as chairman of the Committee on Finance and Revenue, acknowledged that critics of the proposal likely would see the athlete tax as a bridge to a broader tax that takes on lawyers, lobbyists or other professionals who shuttle into the District from high-priced homes in neighboring states.
The D.C. Home Rule Act of 1973 does not allow the city to impose a tax on nonresidents. So to make a jock tax a reality, the resolution’s sponsors needed Mrs. Norton to amend the nonresident section of the tax code to say “except for professional athletes.”
Most sources trace the jock tax back to a tit-for-tat between California and Illinois in 1991, when the Golden State decided to tax Michael Jordan and company after the Chicago Bulls’ victory over the Los Angeles Lakers in the NBA Finals.
Illinois instituted the tax as well, and the practice snowballed from there. California has reported more than $100 million in annual revenue from the tax, and a “more modest proposal” in Tennessee projects $1.1 million, according to the council resolution.