The Cleveland Cavaliers pulled off the impossible: coming back from 3-1 series deficit in the NBA Finals, playing two games on the road, and ultimately winning the championship. It would seem far-fetched to say that they took a massive loss on Sunday night. But that was partly the case as they ran into an exorbitant “duty days” tax, commonly known as the Jock Tax.

The Cleveland-based organization traveled to the Golden State, which meant players and staff had to pay 13.3% tax on earnings for each day they were there. (In comparison, Ohio previously ruled that the city of Cleveland’s jock tax was unconstitutional, meaning the Warriors’ organization did not have to pay any taxes in their three NBA Finals away games.) As per Forbes, Finals MVP Lebron James makes about $23.3 million as his base salary. With 229 days in the season, it averages about $101,310 a day. The Californian duty tax would yield about $13,500 a day, with close to $54,000 over the four game days. This is not including the days spent in California practicing, media events, or extra bonuses the players make.

The Start of the Tax

 

Taxing professionals that come into the state to work is not a new phenomenon. In 1991, Michael Jordan and the Chicago Bulls defeated the Los Angeles Lakers and were met with California imposing a tax on their winnings. Illinois retaliated and instituted a tax on visiting athletes if their team belonged to a state which would tax Illinois-based organizations. Since then, most states and cities have instituted some form of a jock tax.

Short-Sighted Tax Policy

 

Last week, we mentioned that the State Controller of California realized the state is in desperate need of tax reform. Taxing out-out-state professionals is a start, of sorts. Still we have to wonder about the many traveling professionals who don’t make nearly enough money to have to file taxes in all the states they worked in, including some of those who work with the professional sport organizations (saying nothing about the fees they may have to pay by hiring tax professionals to sort through the mess that is left).

Taxation without Representation

 

Is this important phrase, catalyst to the American Revolution, lost in this modern-day tax law? The people that are affected, professionals traveling state to state, do not have an opportunity to vote for the repeal of the law.

What are your thoughts about professionals being charged a tax to work in states other than their own?