Pennsylvania Rejects Pittsburgh’s ‘Jock’ Tax

On September 25, the Pennsylvania Supreme Court unanimously ruled that Pittsburgh’s 3% nonresident sports facility usage fee, also referred to as a “jock tax,” discriminates against nonresident athletes and entertainers who perform in the city’s three publicly funded sports venues  in violation of the uniformity clause of the Pennsylvania Constitution. 

Under Pennsylvania’s Local Tax Enabling Act, in 2005, Pittsburgh began imposing a 3% nonresident sports facility usage fee on income earned by nonresident athletes and entertainers when performing in city-owned stadiums and arenas (PNC Park, Acrisure Stadium, and PPG Paints Arena). However, those nonresident individuals are exempt from both the city’s earned 1% income tax and 2% school district tax, which do apply to Pittsburgh residents.

The state’s uniformity clause requires that “every tax operate alike on the classes of things and property subject to it.” While it does not require absolute equality or perfect uniformity in taxation, the clause is violated when a method or formula for computing the tax in operation or effect produces arbitrary, unjust, or unreasonably discriminatory results. It does require a Pennsylvania tax that treats similarly situated taxpayers as members of distinguishable classes resulting in unequal tax burdens to have a legitimate, concrete justification for that disparate treatment.  

The state supreme court ruled that Pittsburgh did not provide concrete reasons that would justify less favorable tax treatment for nonresident athletes and entertainers than resident athletes and entertainers and that the facility fee therefore violated the Pennsylvania Constitution’s uniformity clause. The court disagreed with the city’s argument that the equalization of tax burdens between two groups of taxpayers — residents subject to a 1% income tax and 2% school tax and nonresidents subject to a 3% facility fee tax — cannot violate the uniformity clause, noting that because the school district tax cannot be applied to nonresidents, it cannot be used to justify the discriminatory imposition of the facility fee only on nonresidents.

Because Pittsburgh can no longer collect the 3% jock tax, nonresident athletes and entertainers might now be subject to the city’s 1% earned income tax.