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CNN Live Saturday

Athletes and Entertainers Subject to So-Called 'Jock Tax'

Aired June 02, 2001 - 16:19   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DONNA KELLEY, CNN ANCHOR: Boy, if you think your tax bill is bad, imagine paying $16,500 in taxes for just one day's work. That's the plight facing Baltimore Ravens star Ray Lewis, and he's not alone. As Peter Viles explains, it's all thanks to the so-called "jock tax" that many states are slapping on professional athletes and entertainers.

(BEGIN VIDEOTAPE)

PETER VILES, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): No one's asking you to feel sorry for Alex Rodriguez. He makes $25 million a year and works mainly in Texas, where there's no state income tax. But you might feel sorry for his accountant, because the local tax man is waiting for A-Rod at ballparks across America, hitting him with state taxes when he plays in Anaheim, Oakland, Baltimore, Boston, Chicago, Cleveland, Detroit, Kansas City, Minnesota, and New York.

Scott Boras is A-Rod's agent.

SCOTT BORAS, AGENT: The vogue of states taxing professional athletes has been something that's really reared its head. And for the average player, you may be talking about anywhere from 16 to 18 returns with inter-league play.

BRITTANY SPEARS, ENTERTAINER (singing): Hit me baby one more time.

VILES: Don't worry, the tax man will. Entertainers also get hit on the road. Tax collectors insist no one's being singled out.

HARLEY DUNCAN, EXECUTIVE DIRECTOR, FEDERATION OF TAX ADMINISTRATORS: The general rule in income taxation is that income is taxed where it's earned, or where the service is performed, so that I don't have an opportunity, or there is no incentive to, say, live in a non-income tax state and work in an income-tax state.

VILES: In all, 21 states impose their income tax on visiting athletes, often earmarking the money to pay for new stadiums.

RICK HORROW, HORROW SPORTS VENTURES: The real key to this is there have been 260 sports, arts, entertainment facilities developed in the last 10 years, at a cost of over $20 billion. So to the extent you can find some way where the users or beneficiaries of facilities can pay at least a part of those public private partnerships, you've hit a home run.

VILES (on camera): So when teams come to Yankee Stadium, they get hit twice. First, they have to play the world champions, then they have to pay some of the highest local taxes in America.

Peter Viles, CNN Financial News, New York.

(END VIDEOTAPE)

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