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When LeBron James returns to Cleveland as a member of the Miami Heat during the upcoming NBA season, a small slice of his game-day check will be carved out and handed over to the city of Cleveland.
Taxing the income of visiting professional athletes – the "jock tax," as some derisively call it – is a common practice around the country that was incorporated into Ohio law in 2000.
Ohio’s cities with major professional sports franchises have been collecting the tax for years, but recently the jock tax has become an issue in the state auditor’s race, a closely watched election because the winner will sit on the five-member Apportionment Board that will redraw Ohio’s legislative districts next year.
Republican Dave Yost, in his quest to paint Democratic opponent David Pepper as a serial taxer, has blamed Pepper for instituting a jock tax when he was a Cincinnati city councilman. (To be clear, the state auditor cannot levy taxes.)
"Pepper also kicked off a jock tax, imposing a levy on the sports and entertainment industry," according to a video Yost’s campaign produced in August.
PolitiFact Ohio asked Yost’s campaign to back up the claim. It pointed to legislation Pepper sponsored as a city councilman in 2002 that called on Cincinnati to begin collecting income taxes from visiting professional athletes and entertainers. The motion passed and Cincinnati began collecting the tax.
Pepper, now a county commissioner in Cincinnati’s Hamilton County, denies responsibility for imposing the tax. Pepper instead blamed state lawmakers who included the jock tax in a comprehensive municipal tax bill passed in 2000. Pepper said that bill, HB 483, forced cities to tax those athletes’ earnings.
We took a closer look at HB 483 and found a provision that prohibits cities from taxing the income of anyone who works in a city for 12 or fewer days in a calendar year. An exception to that rule, however, is "a professional entertainer or professional athlete … as may be reasonably defined by the municipal corporation," the bill reads. That means an Ohio city can tax a professional athlete’s pay, no matter how many days he works there. (The provision originally was part of another bill that passed in 2000, HB 477, but was thrown into HB 483 for technical reasons.)
While Pepper argued state law requires Cincinnati to collect the jock tax, experts we talked to said the 2000 state law placed Cincinnati under no obligation to do so.
"It’s up the city," said John Mahoney, deputy director of the nonpartisan Ohio Municipal League, which represents the collective interests of the state’s municipalities.
Cities, under home rule powers, generally have the final say when deciding whose income to tax. State lawmakers can only limit this authority, Mahoney said. The Ohio Municipal League, he noted, worked with lawmakers on the issue during the legislative process.
Don Mottley, a former Republican state representative who sponsored both HB 483 and HB 477 and chaired the House Ways and Means committee hearings on each bill, agreed with Mahoney.
"There’s nothing in there that requires them to tax athletes and entertainers," Mottley said. "It just permits them to."
Mottley left the General Assembly at the end of 2000 and began practicing law. He also is a former chairman of the Ohio State Bar Association’s taxation committee.
He represented the Cincinnati Bengals before the Cincinnati City Council in 2002 in opposition of Pepper’s legislation. The Bengals feared Cincinnati’s tax on opposing players would prompt more NFL cities to pass similar laws, Mottley said.
But Cincinnati was far from the first city to collect a jock tax. Cleveland has been collecting the tax for more than three decades, and Columbus, home to an NHL team and a Major League Soccer team, has been doing so since the mid-1990s.
In his defense, Pepper said the video makes it seem as if he created a never-before-seen tax. Pepper said he wanted Cincinnati to be in step with state law that allowed it to tax visiting athletes’ income. He said city law mandates taxing all qualifying wage earners.
It is true that Pepper did not create the jock tax: It was collected in other cities before he pushed for it in Cincinnati. And a claim in the video that "CNN called it one of the strangest taxes in America" is an overstatement. The jock tax was included in a 2005 CNNmoney.com article that described, in general terms, how athletes’ income is taxed in different states. The story did not mention Pepper or the city of Cincinnati.
However, Pepper’s legislation, while beneficial to the city budget, did institute the tax collection in Cincinnati. And the experts we talked to said collecting the tax was the city’s prerogative. Pepper can’t duck responsibility for starting the tax in Cincinnati.
We find the statement True.
Dave Yost campaign YouTube video, "Meet David Pepper," uploaded Aug. 10, 2010
Cincinnati City Council motion directing the city to tax income of visiting professional athletes and entertainers
Ohio House Bill 477, 123rd General Assembly
Ohio House Bill 483, 123rd General Assembly
CNNMoney.com article, Feb. 22, 2005
Interview with state auditor candidate David Pepper
Interview with John Mahoney, Ohio Municipal League
Interview with Don Mottley, lawyer and former Ohio state representative
Interview with Nassim Lynch, income tax administrator for the Cleveland Central Collection Agency
Interview with Melinda Frank, Columbus income tax administrator
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