Don't Mess With Taxes

It's a big day, alright, for the Michigan tax collector.

Sure, either the Steelers or the Seahawks will leave Detroit with a Super Bowl ring and a lot of accompanying cash. But thanks to the state's jock tax, Michigan will have a much fatter bank account, too.

Jock tax is the popular name of a tax levied by states (and some local taxing jurisdictions within the state) on the income earned by visiting professional athletes. According to the Tax Foundation, 20 of the 24 states that have a pro team -- NFL, NBA, NHL or MLB -- also have a jock tax. But the tax isn't limited to the Roethlisbergers or A-Rods or Shaqs. All of the teams' employees have to pay it.

The Sports Law Blog takes a look at the jock tax here. And the Tax Foundation provides a thorough examination of the tax and its consequences here, including a nice map showing where the tax is collected compared to states with professional sports franchises.

Beyond the playing field: The jock tax seemed such a good idea, in fact, that many of the states also apply the tax to anyone who comes across their borders to work -- musicians, other entertainers, lawyers and the like.

Think you're off the hook? Maybe not.

Last year, a computer programmer who lived in Nashville, Tenn., but worked primarily electronically for a New York-based company, was hit by with a NY tax bill on his full salary.

The Empire State's justification for the levy: The employee had come into the state a couple of times in connection with his work on the project. This provided, in tax terms, a valid "economic nexus" that allows the state to collect.

The Tennessee worker, who faces no state tax on wage income in his home state, took his argument all the way to the U.S. Supreme Court, but the high court refused to hear it, so he's stuck with the New York bill.

This case raises concerns among the almost 10 million people who work at home full- or part-time (including yours truly!). Many of us live in one state but work for employers in other states (me again).

Tax issues could get sticky, and costly, if cash-strapped states decide to follow New York's law (Pennsylvania and Nebraska already have similar laws) or even expand it to apply their tax systems to totally telecommuting workers.

In the wake of this case, the Telecommuter Tax Fairness Act was introduced by Sens. Shays and Dodd of Connecticut, a state with many constituents who live there but occasionally go into nearby NYC on business. The bill would require that workers be physically present and working in a state for that state to be allowed to collect income tax from employees.

I'm 1,500 miles from Connecticut, but to Shays and Dodd, I say, "You go, guys!"

Mo' monkeys: After reading my paean to primates, Chris dropped me a note with some exciting office chimp news:

"There's only one way to experience CareerBuilder's monkeys first hand. Check out this site: www.monk-e-mail.com. Hours of fun await."

Thanks Chris. You are so right! All you cheeky wee monkeys, enjoy!