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Pittsburgh's 'Jock Tax' Is Unconstitutional, Pennsylvania Court Holds

Posted on Sep. 27, 2022

Pittsburgh's 3 percent fee on personal income earned by nonresident professional athletes while using the city's sports venues violates the Pennsylvania Constitution, according to a state trial court.

In a September 21 decision in Francoeur v. City of Pittsburgh, the Allegheny County Court of Common Pleas struck down Pittsburgh’s nonresident sports facility usage fee, holding that the levy is a tax and violates the state constitution's uniformity provisions by discriminating against out-of-state residents.

The 3 percent facility fee, commonly referred to as a "jock tax," is not imposed on resident athletes.

In November 2019 former Philadelphia Phillies baseball player Jeff Francoeur, former Pittsburgh Penguins hockey player Scott Wilson, New York Islanders hockey player Kyle Palmieri, and the players’ associations for the National Hockey League, Major League Baseball, and National Football League filed suit challenging the constitutionality of the fee.

The plaintiffs argued that the facility fee is a tax and, as such, violates the uniformity clause of the Pennsylvania Constitution and the immunities and dormant commerce clauses of the U.S. Constitution by charging a discriminatory rate on nonresidents.

The court, in an opinion by Judge Christine Ward, agreed with the plaintiffs regarding the fee being a tax and violating the state constitution. However, she declined to address the argument regarding the U.S. Constitution, saying that “a violation of either the Pennsylvania Constitution or United States Constitution would be sufficient on its own to be fatal to the facility fee.”

Noting that, under state precedent, taxes “raise revenue for general public purposes while fees defray the cost of government regulatory activities,” the court determined that the facility fee does not constitute a fee because it applies only to professional athletes, it is not subject to regulation or a licensing authority, and payment of the fee is not required for use of the city’s sports venues. According to the court, the facility fee meets the description of a tax because it goes toward the general fund, it is used to offset taxes on performing arts facilities, and it is assessed against salaries and wages.

The court said that as a tax, the facility fee is subject to the state constitution’s uniformity clause, which requires taxes on similarly situated subjects to be uniform unless there is a rational basis for an exception. Noting that “Pennsylvania Courts have consistently held that residence cannot be made the basis of discrimination in taxation of persons engaged in the same profession,” the court found that the facility fee is facially discriminatory because resident athletes are subject only to a 1 percent tax on their income.

Although the city argued that residents and nonresidents pay the same effective tax rate because residents pay a 2 percent income tax toward city schools as well as the 1 percent base income tax, the court disagreed, finding that the city “cannot find uniformity where a separate entity taxes residents for a separate purpose.”

“There is no permissible or rational basis for an unequal application of tax rates across residents and nonresidents, and unequal application of tax rates across the same profession. With no rational basis for this discriminatory practice, the Facility Fee is a clear violation of the Uniformity Clause of the Pennsylvania Constitution,” the court said.

Stephen Kidder of Hemenway & Barnes LLP, who represented the plaintiffs in this case and who also successfully challenged the jock taxes in Ohio and Tennessee in Hillenmeyer v. Cleveland Board of Review and Thornton v. Haslam, respectively, told Tax Notes that his clients are pleased with the decision.

“The Court recognized that the Pittsburgh Sports Facility Usage Fee was in fact a tax and violated the Uniformity Clause. Professional athletes accept the fact that they are required to pay taxes in cities and states where they play games. But when those tax systems discriminate against athletes, as Pittsburgh’s system did, we will challenge them,” Kidder said.

The taxpayers in Francoeur v. City of Pittsburgh (No. GD-19-015542) are represented by Kidder and Ryan McManus of Hemenway & Barnes LLP.

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