Friday, May 20, 2011

I see no good reason to not have Kobe Bryant pay for the building of a new Sonics arena.

Washington State Representative Mark Hope (R-Lake Stevens) and David Frockt (D-Seattle) are hoping to form a Task Force this summer to develop a plan for funding sports arenas and stadiums.

“I think it’s an economic issue,” said Rep. Mike Hope, R- Lake Stevens. He believes the state should be involved in building an arena to lure a franchise back. He also believes it can be done without using Washington taxpayer money.
That’s why he and State Rep. David Frockt, D-Seattle plan to lead a task force this summer to come up with a solution.
“It’s time to revisit the issue,” said Frockt, who also acknowledges there is “no appetite for a public subsidy." Frockt believes the state needs to look at all the financing options on the table.
Hope suggests the state pursue a “Jock Tax” on visiting athletes to partially pay for a new NBA-ready building. It’s a type of tax already in place in several states.
“Right now, you have the Seattle Mariners, Seattle Seahawks going to California to play games, going to Cleveland, Ohio to play games and Cleveland is getting money from our players,” said Hope.
Chris Daniels, Could 'Jock Tax' help bring Sonics back?, KING5 News

This really isn't a new idea, the last time this idea appeared was last year when it was included in a dozen amendments Washington State Senator Rodney Tom sandbagged House Bill HB 2912 with (David Frocht, I sent a link to this amendment to you a few days ago).
2912-S.E2 AMS TOM CARL 101

2ESHB 2912 - S AMD TO  S AMD (S-5336.1) 316
By Senator Tom
    On page 13, after line 28, insert the following:
"NEW SECTION. Sec. 1.  A new section is added to chapter 82.04 RCW to read as follows:
    (1) A rate of tax under this chapter equal to ten percent is imposed on the gross income of a professional athlete derived from Washington sources.
    (2) "Professional athlete" means:
    (a) a resident or nonresident athlete who renders labor or services to a professional athletic team that plays ina sports facility financed with ten percent or more public funds; and
    (b) A resident or nonresident athlete who has a gross annual income that is ten times the first-year base salary of a public school teacher in Washington state."
    Renumber the sections consecutively and correct any internal references accordingly.
2ESHB 2912 - S AMD TO  S AMD (S-5336.1) 316
By Senator Tom
    In the title after "36.100.020;" insert "and adding a new section;"
           EFFECT: Applies a 10% B&O tax on professional athletes.
HB 2912, Amendment 316

10% looks a little high, and it is until you consider that Seahawks, Sounders, and Mariners pay California State Income Tax on the wages earned during that game, when they play there. Most of those athletes are in the 11% tax bracket. Still, the point isn't to tax professional athletes just for the fun of it, it's purpose is to fund sports facilities.

A story written in the LA Times back in 2009 does an excellent job of describing the situation, application, and examples.
If opening day is the best day of the year for professional athletes, then April 15 -- tax day -- is probably the worst. Especially now that 20 of the 24 states with franchises in at least one of the four major pro leagues -- the NFL, NBA, NHL and Major League Baseball -- have laws that require visiting athletes to pay state income tax for each game they play there.

Considering that top-level athletes in football, basketball, hockey and baseball now make an annual average salary of $2.9 million, that means big bucks for states such as California. Home to 15 major professional teams, the state raked in $102 million in taxes from visiting athletes in 2006-07, the last year for which records are available.
. . .
Athletes are taxed based on "duty days" they spend in each state. In baseball, there are approximately 181 "duty days," meaning a player earning $1.81 million would make $10,000 each duty day. Therefore, if that player's team had three games in California, he would be responsible for taxes on $30,000 of income.
. . .
At that point, all the tax collectors have left is a math problem to figure out that Ichiro Suzuki, the highest-paid baseball player in Washington, a tax-free state, will have to pay more than $218,000 in California taxes for the 25 games the Mariners will play there this summer.[2009]
. . .
The advent of the jock tax is commonly traced to the 1991 NBA Finals in which the Chicago Bulls beat the Lakers, then received tax bills from California for the three games played in Los Angeles. However, nonresident tax laws have been on the books in the state since the 1950s. . . .
When the Seahawks played the Steelers in the title game three years ago in Detroit, Seattle quarterback Matt Hasselbeck reportedly had to pay about $10,000 in taxes to Michigan, a state with which he has no ties. If that game had been played in Florida, as two of the last three Super Bowls were, he could have kept the money.

The taxing life of a pro athlete: It's one of life's certainties: Athletes have to pay for income earned on the road., Kevin Baxter, LA Times (2009)
Please, read the entire story.

Understand this, our professional athletes are paying taxes in other states. As I write this, the Seattle Mariners are just about to start playing a game against the San Diego Padres, in California, and pay income tax. When the A's, Padres, Angels play in Seattle they do not pay an income tax, B&O tax.

I see no good reason to not have Kobe Bryant pay for the building of a new Sonics arena.

The only question I have is how much?


Kieran in Dallas said...

Crazy thing is people up there are so "anti tax" & "anti sports" they won't bother reading it and educating themselves on it. People are "tax brainwashed" an it is insulting and utterly ridiculous.

I on the other hand think it's a great idea. The Dallas-Fort Worth metroplex has teams in the NFL, NBA, NHL, MLB, Arena Football and 3 Minor League Baseball teams as well as a team in the MLS. If this was proposed here it would pass WITHOUT QUESTION! Seattle on the other hand is still bickering on what should be the flavor of the month at Baskin-Robbins.

bmac said...

But since we dont have an income tax here, im sure the visiting athletes would think its bs since its only confined to visiting atletes, what about visiting doctors, truck drivers etc. the athletes could have a case of being unfairly targeted, or more realistically some group of local anti tax ,equal rights activist would stage a protest. only in wash

JAS said...

Here’s a key quote from that L.A. Times article, bmac:

In the tax world, it's no secret that athletes are treated differently from other highly paid workers -- investment bankers and corporate lawyers, for example -- who also work in multiple states.

Even in states with income taxes, athletes are singled out from others doing business from out of state. They’re easier targets because their schedules are easily available and no one feels sorry for them due to their high salaries. That’s why it’s called a “jock tax”—it’s especially aimed at them.

You can debate whether such a thing is fair in principle, but I don’t think it would be any more controversial having a jock tax in WA than it is in California or other states that do have income taxes. They would just cover it by calling it a B&O tax instead of income tax.

bmac said...

Dont get me wrong. i want it and support the Jock Tax. However, being here in Seattle ive seen it all politically. It would certainly not surprise me at all to have a group come out in opposition of this tax merely on its targeted demographic. wasnt there a income on the rich that failed?. For me it would just figure. It feels like if it has to do with sports ,it just fail at every turn,which is so baffling since there are so many sports fans here. It always surprises me. For every Van Dick I can show you 5 Sherman Alexie's

Mr Baker said...

I was going to do this last night in a second story. I'll write it now, and have it up later today or tomorrow.

SteilacoomSteve said...

Mr Baker,
I left this question on SONICSCENTRAL but it was still in moderation last I checked. Does the failure of SB5958 have any effect on other cities(bellevue) from building an arena? I am stationed in El Paso and your site and Sonicscentral are some of my only links to the current thinking in my home state.

Mr Baker said...

"Does the failure of SB5958 have any effect on other cities(bellevue) from building an arena?"

In 2021 control of the Hotel tax changes control from King County to the cities if no bill passes between now and 2021. That sounds good for Seattle or Bellevue, except the uncertainty between now and 2021 (paying off Qwest Field) could prevent those cities from acting sooner.
4Culture would lose their existing portion when Safeco is paid off, then ALL of the tax revenue goes to paying off Qwest.

If SB 5834 were to pass, and pass as-is (hotel tax only, 4Culture gets a slice in 2021, county retains control) then it would be up to the county what they would want to do with the portion not going to 4Culture. They could make decisions now, borrow and bond as soon as Safeco is paid off.

That would not be enough to completely build an arena, but it would be enough to partner with a private investor to make something happen.

Mr Baker said...

I guess that if you are Bellevue you want SB 5834 to pass as-is, or nothing to pass.

Mr Baker said...

Lookout, more craziness, a new bill, SB 5961

Blog Feeds