As the clock runs out this week on Tennessee’s infamous “jock tax,” the city of Memphis is about to turn over $2.38 million to more than 900 professional basketball players as part of a 2015 settlement. The city will return its portion of the money — a third of the $7.27 million it’s collected since Tennessee’s professional privilege tax was approved in 2009 — within the next three or four weeks, said Brian Collins, the city’s chief financial officer. “(The money) was reserved a long time ago, and it won’t have an impact on the city’s budget this year or any year,” Collins said. The city set the funds aside in fiscal year 2015.
Storyline: Taxes
The flat tax of $2,500 per game up to $7,500 for NBA and NHL players was widely criticized for eating up most — and in some cases all — of the income lower-paid athletes received from basketball games in Memphis and hockey games in Nashville. Gary Kohlman, general counsel for the National Basketball Players Association (NBPA), which sued the state over the tax, said “dozens” of players earning the legal minimum paid more in the tax than they earned from the games. “That was not an isolated event,” he said.
The city’s portion of proceeds of the NBA tax ranged from $1.1 million up to $2.1 million annually in years the tax was fully implemented, and went toward attracting and marketing events at FedExForum. The Memphis Grizzlies declined to comment. The payments end the controversy in Tennessee, but Kohlman said other states have tried similar taxes, including Ohio, home to the Cleveland Cavaliers and its star player LeBron James. Kohlman said the NBPA is filing refund requests now, and could sue Ohio if the requests are denied.