Detroit Redefines 'Annual' To Take Much Bigger Income Tax Bite From Pro Athletes

The city of Detroit will get a tax collection boost once the Pistons basketball team relocates to a new downtown arena. The boost will come not from the arena, but from a city income tax levy on professional athletes that reaches far more deeply into their wallets than other non-residents who work part-time in the city.

The city has created its own formula for defining the days supposedly covered by the salaries earned by professional football, baseball and hockey players. The definitions have the effect of greatly increasing the tax bite on players who don’t live in Detroit.

Basketball moves to downtown next season, and members of the Detroit Pistons will feel a heavy pinch.

Based on the formulas provided for the other sports teams, Andre Drummond, the highest paid Detroit Piston and projected to earn $23.8 million next season, would pay about $158,500 in Detroit city income tax.

“Obviously, the city of Detroit is happy there will be more high-paid athletes working downtown,” said James Hohman, assistant director of fiscal policy for the Mackinac Center for Public Policy.

Joseph Henchman, vice president of legal and state projects for the Tax Foundation, said “jock taxes” are common.

“While they’re sold as hitting up visiting millionaire athletes, they apply to all team support staff as well. Assistants and traveling staff will also get the pleasure of filling out dozens of income tax returns for all over the country,” Henchman said in an email. “It’s popular for governments to do this but ultimately is just shifting money around the country at great expense.”

The tax is “apportioned” on visiting athletes based on the number of days they are in the city for game-related activities – “city days” – divided into a roster of “duty days” the city has invented. This has the effect of greatly increasing how much the city can extract from players compared to using an annual salary in the formula.

For professional baseball players the number of “duty days” is 178. It is 184 days for hockey players and 119 days for football players.

Note too that those “city days” are not just game days, but include travel and practice days on either side of the game. So a visiting football player who arrives in Detroit Friday, has practice Saturday, a game Sunday and departs on Monday, will accumulate four taxable “city days” – Friday, Saturday, Sunday and Monday.

Again, this greatly increases the amount taken.

The city document gave an example of a mythical baseball player who played for the New York Giants. Joe Jones made $1 million in salary in 2017 and played a four-game series in Detroit in June 2017. The team traveled to Detroit on Thursday and played games on Friday, Saturday and Sunday. The Giants held a team practice at Comerica Park on Monday and left via a charter flight to that next town.

That player would owe $377.08 in city income tax based on five “city” days out of a roster of 178 actual “duty days” on which the city asserts his annual salary is based.