PITTSBURGH – The City of Pittsburgh is facing a lawsuit from a trio of professional athletes and the players’ associations of Major League Baseball, the National Football League and the National Hockey League, claiming its “jock tax” that is applied to both resident and non-resident athletes is unconstitutional.
The unions - along with former Pittsburgh Penguins forward Scott Wilson, New Jersey Devils forward Kyle Palmieri and veteran former baseball player Jeff Francoeur - filed suit in the Allegheny County Court of Common Pleas on Nov. 5 against the City.
The “jock tax” is a three percent income tax on visiting professional athletes and those who live outside Pittsburgh as a “non-resident facility usage fee” for major sports venues that are publicly funded in the City: PNC Park (Pittsburgh Pirates), Heinz Field (Pittsburgh Steelers) and PPG Paints Arena (Pittsburgh Penguins).
However, residents of Pittsburgh who access and use the facilities only pay a one percent income tax.
This is the major objection of the lawsuit, as it labels the taxes “unconstitutional.”
The plaintiffs cite the Pennsylvania Constitution’s provision that all taxes be “uniform," arguing the City can’t levy different taxes on residents and non-residents, and furthermore, cite the U.S. Constitution’s text which “prohibits states and municipalities from establishing conditions on professional work that are more burdensome for non-residents than they are for residents.”
Wilson, currently working under a two-year deal with the Buffalo Sabres worth $2.1 million, paid a $6,000 tax to Pittsburgh in 2016.
Palmieri, in the middle of a five-year, $23 million contract with the Devils, paid $1,900 to the City in 2016.
Finally, Francoeur, who made $1 million playing for the Atlanta Braves in 2016, paid $800 of that sum to Pittsburgh that same year.
Lawyers for the players have successfully overturned similar taxes in other states, such as Ohio and Tennessee.
Pittsburgh Mayor Bill Peduto explained the rationale behind the tax created in 2005, during a time when the City was enduring difficult financial straits.
“The stadiums themselves have been paid for by taxpayers. They use them as their place of work. There was a way we felt that some of that money could be recouped for the public and we will let the judge decide,” Peduto stated.
It will not be the first battle over controversial regulations enacted by the City of Pittsburgh.
Challenge is "long overdue"
Jay K. Reisinger, a partner at Pittsburgh-based Farrell Reisinger & Comber who manages the firm’s sports law practice and has extensive experience representing professional athletes, agrees that the tax is unconstitutional.
“In my opinion, it’s long overdue. Professional athletes, not just in Pittsburgh but in other jurisdictions, have been singled out for a so-called use tax or a licensing fee, etc., so that local municipalities that have stadiums and professional teams can charge those players,” Reisinger said.
“Everybody knows where the Steelers are playing, but you don’t know what lawyers from New York are coming into Pittsburgh to work there and earn money, that aren’t paying the same tax. So, what’s the difference? The difference is you can actually figure out where these [athletes] are, where they play and where they earn money.”
Reisinger sees the action being successful in the future, given that prior cases in other jurisdictions were successful in overturning the athlete tax – and downplayed the notion that even if the plaintiffs were victorious, that it would affect matters like free agency and bringing athletes to Pittsburgh.
“I don’t think that has anything to do with it. The determinative factor with respect to free agents, and by the way, I’m not sure it’s that determinative – but for example, if you go play in California as a free agent, you’re going to pay significantly more in income tax than you are in the state of Florida or Texas, which don’t have state income tax,” Reisinger said.
“This isn’t going to change it, this is only for visiting athletes. So, I don’t think it’s going to have any effect on free agency and Pittsburgh things. In fact, I can guarantee it won’t.”
Placing the situation in a hypothetical context, Reisinger said if a paper salesman from New Jersey comes to Pittsburgh and makes a large sale to a Pennsylvania company, he wouldn’t get taxed for that – but if Le’Veon Bell, a member of the New York Jets and formerly the Pittsburgh Steelers, were to return to the City as a visiting athlete, he would be subject to the athlete tax solely based on his profession.
“It’s unconstitutional,” Reisinger said.
The attorney also cited the provisions in the Pennsylvania Constitution regarding the mandate for uniformity in taxation, and pointed to the current disparity between fees levied on resident and non-resident athletes being a violation of that same tenet.
The plaintiffs are represented by Charles L. Potter Jr., John T. Vogel and Scott R. Leah of Tucker Arensberg in Pittsburgh, plus Stephen W. Kidder, Ryan P. McManus and Michael P. Moore Jr. of Hemenway & Barnes, in Boston.
Allegheny County Court of Common Pleas case GD-19-015542
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com