This week, Super Bowl 50 and all its accompanying fanfare has descended into the city of Santa Clara, as the AFC champion Denver Broncos get set to do battle with the NFC champion Carolina Panthers. Blood will be bled and tears will be shed, as these two teams clash for the right to hoist the Lombardi Trophy. But it all might pale in comparison to the pain some of the athletes feel when they receive their game checks for the world's biggest sporting spectacle, thanks to the "jock tax."
The jock tax stipulates that anyone who earns income outside of the state in which they file their taxes is potentially subject to additional state and local taxes for the amount of time spent working in a particular jurisdiction. For athletes, this includes games, practices, and team meetings.
It's not new by any stretch of the imagination. In fact, the roots of the tax can be traced back to the 1991 NBA Finals, when California taxed the Chicago Bulls players after they took on the Los Angeles Lakers in L.A. In a move dubbed "Michael Jordan's Revenge," Illinois imposed a similar tax that affected visiting players from states who levied a tax on Illinois athletes. Many states soon followed suit.
So this week, as Peyton Manning's Broncos and Cam Newton's Panthers practice, watch film, and even trudge through media day, they're earning their keep in the state of California, and will have to pay tax on their income for those days worked in the state.
I recently spoke to Robert Raiola, the Sports & Entertainment Senior Group Manager at CPA and consulting firm O'Connor Davies, LLP. A certified public accountant, Raiola is a nationally recognized expert on sports tax and sports business matters. He represents a number of professional athletes in tax and related matters, and he told me that, in theory, a businessman that attends a meeting in a different state for a day could be subject to a similar tax. But athletes are far easier to target than normal everyday people, and create far better revenue for the states.
"Athletes are targeted for a jock tax for a couple reasons. They're high profile, high salary, and easy to track. It's big business," he explained. "In 2013, California collected more than $229 million in income tax from athletes. It's an opportunity for states to replenish their coffers. A number of states and cities have an occasional entry rule, where if you spend less than 10 or 12 days in a city, you don't have to pay tax, but athletes are almost always excluded in these instances."
Related: Cam Newton throughout his career.
Cam Newton through his career
Super Bowl, meet super tax
Auburn quarterback Cam Newton helps fire up his team prior to the start of the fourth quarter against Alabama at Bryant-Denny Stadium in Tuscaloosa, Alabama, on Friday, November 26, 2010. The energy served his team well as Auburn rallied to defeat Alabama, 28-27. (Photo by Robin Trimarchi/Columbus Ledger-Enquirer/MCT via Getty Images)
NEW YORK - DECEMBER 11: 2010 Heisman Trophy candidate Cam Newton of the Auburn University Tigers speaks at a press conference at The New York Marriott Marquis on December 11, 2010 in New York City. (Photo by Jeff Zelevansky/Getty Images)
NEW YORK, NY - DECEMBER 11: Quarterback Cam Newton of the Auburn University Tigers speaks after being named the 76th Heisman Memorial Trophy Award winner at the Best Buy Theater on December 11, 2010 in New York City. NOTE TO USER: Photographer approval needed for all Commercial License requests. (Photo by Kelly Kline/Getty Images for The Heisman)
NEW YORK , NY - DECEMBER 12: ( L- R ) Bo Jackson (1985), Cam Newton (2010) and Pat Sullivan (1971) the three Heisman Trophy winners from the Auburn University Tigers pose during a portrait session on December 12, 2010 in New York City. NOTE TO USER: Photographer approval needed for all Commercial License requests. (Photo by Kelly Kline/Getty Images for the Heisman)
INDIANAPOLIS, IN - FEBRUARY 27: Cam Newton passes the ball during the 2011 NFL Scouting Combine at Lucas Oil Stadium on February 27, 2011 in Indianapolis, Indiana. (Photo by Joe Robbins/Getty Images)
CHARLOTTE, NC - CIRCA 2011: In this handout image provided by the NFL, Cam Newton of the Carolina Panthers poses for his NFL headshot circa 2011 in Charlotte, North Carolina. (Photo by NFL via Getty Images)
Carolina Panthers quarterbacks Derek Anderson, left, and rookie Cam Newton stand on the sideline during the first quarter against the New York Giants at Bank of America Stadium in Charlotte, North Carolina, Saturday, August 13, 2011. (Jeff Siner/Charlotte Observer/MCT via Getty Images)
Carolina Panthers quarterback Cam Newton (1) looks downfield for a pass in their game on Sunday, November 27, 2011, in Indianapolis, Indiana. The Panthers won the game 27-19. (Sam Riche/MCT via Getty Images)
CHARLOTTE, NC - DECEMBER 11: Quarterback Cam Newton #1 of the Carolina Panthers meets Matt Ryan #2 of the Atlanta Falcons after the game at Bank of America Stadium on December 11, 2011 in Charlotte, North Carolina. The Falcons defeated the Panthers 31 to 23. (Photo by Rob Tringali/SportsChrome/Getty Images)
Carolina Panthers QB Cam Newton - January 2012. Bigger, Faster, Stronger, Smarter, Younger - Today's athletes are the sports they play continue to evolve at an extraordinary rate - which means 2012 ought to be unlike anything you've seen before (Photo by Sporting News via Getty Images)
INDIANAPOLIS, IN - FEBRUARY 04: Professional Football Player Cam Newton speaks during the 2012 NFL Honors at the Murat Theatre on February 4, 2012 in Indianapolis, Indiana. (Photo by Kevin Mazur/WireImage)
Carolina Panthers quarterback Cam Newton answers questions from the media following the team's game against the Seattle Seahawks on Sunday, October 7, 2012, at Bank of America Stadium in Charlotte, North Carolina. The Seahawks won, 16-12. (Jeff Siner/Charlotte Observer/MCT via Getty Images)
Carolina Panthersquarterback Cam Newton grimaces as his left ankle is tended to by team personnel following an injury in the fourth quarter against the New Orleans Saints at the Mercedes-Benz Superdome in New Orleans, Louisiana, Sunday, December 30, 2012. The Panthers defeated the Saints, 44-38. (Jeff Siner/Charlotte Observer/MCT via Getty Images)
CHARLOTTE, NC - AUGUST 09: Quarterback Cam Newton #1 of the Carolina Panthers takes the field before a preseason NFL game against Chicago Bears at Bank of America Stadium on August 9, 2013 in Charlotte, North Carolina. The Panthers won 24-17. (Photo by Grant Halverson/Getty Images)
CHARLOTTE, NC - SEPTEMBER 22: Cam Newton #1 of the Carolina Panthers stands on the sidelines with his trademark Gatorade towel during the final minute of a win over the New York Giants during play at Bank of America Stadium on September 22, 2013 in Charlotte, North Carolina. The Panthers won 38-0. (Photo by Grant Halverson/Getty Images)
CHARLOTTE, NC - OCTOBER 20: Cam Newton #1 of the Carolina Panthers during their game at Bank of America Stadium on October 20, 2013 in Charlotte, North Carolina. (Photo by Streeter Lecka/Getty Images)
CHARLOTTE, NC - NOVEMBER 18: Cam Newton #1 of the Carolina Panthers warms up for a game against the New England Patriots at Bank of America Stadium on November 18, 2013 in Charlotte, North Carolina. The Panthers won 24-20. (Photo by Grant Halverson/Getty Images)
CHARLOTTE, NC - NOVEMBER 18: Cam Newton #1 of the Carolina Panthers celebrates with fans after the game against the New England Patriots at Bank of America Stadium on November 18, 2013 in Charlotte, North Carolina. (Photo by Scott Cunningham/Getty Images)
CHARLOTTE, NC - JANUARY 12: Cam Newton #1 of the Carolina Panthers celebrates after a touchdown pass to Steve Smith #89 in the second quarter against the San Francisco 49ers during the NFC Divisional Playoff Game at Bank of America Stadium on January 12, 2014 in Charlotte, North Carolina. (Photo by Kevin C. Cox/Getty Images)
NEW YORK, NY - JANUARY 31: Cam Newton rings the closing bell at New York Stock Exchange on January 31, 2014 in New York City. (Photo by Steve Zak Photography/WireImage)
SANTA MONICA, CA - FEBRUARY 15: NFL player Cam Newton attends Cartoon Network's Hall of Game Awards at Barker Hangar on February 15, 2014 in Santa Monica, California. (Photo by David Livingston/Getty Images)
CHARLOTTE, NC - SEPTEMBER 21: Cam Newton #1 of the Carolina Panthers makes his entrance against the Pittsburgh Steelers during the game at Bank of America Stadium on September 21, 2014 in Charlotte, North Carolina. (Photo by Streeter Lecka/Getty Images)
CHARLOTTE, NC - SEPTEMBER 20: Cam Newton #1 of the Carolina Panthers during their game at Bank of America Stadium on September 20, 2015 in Charlotte, North Carolina. (Photo by Streeter Lecka/Getty Images)
TAMPA, FL - OCTOBER 04: Cam Newton #1 of the Carolina Panthers runs across the field after the game against the Tampa Bay Buccaneers at Raymond James Stadium on October 4, 2015 in Tampa, Florida. (Photo by Rob Foldy/Getty Images)
CHARLOTTE, NC - NOVEMBER 02: Cam Newton #1 of the Carolina Panthers takes the field before their game against the Indianapolis Colts at Bank of America Stadium on November 2, 2015 in Charlotte, North Carolina. (Photo by Streeter Lecka/Getty Images)
Nov 17, 2017; Charlotte, NC, USA; Carolina Panthers quarterback Cam Newton (1) and tight end Greg Olsen (88) celebrate a touchdown pass against the Green Bay Packers at Bank of America Stadium. Mandatory credit: Jim Matthews-USA TODAY NETWORK-Wisonsin
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That means that, in addition to the surge the local economy will receive, the state will also take in some major revenue from the nearly 200 active players, coaches, and other team personnel. Just how much? Assuming Manning files in Colorado, where he bought a swanky new $4.575 million home in 2012, he is subject to the state's flat income tax of 4.63 percent. North Carolina also has a single bracket income tax--theirs is 5.75 percent--so assuming Cam Newton files his taxes where he owns a $1.6 million condo, he pays at that level for his home games, and the majority of his practices and prep days. For the days the team works in California on Super Bowl week, many will be subject to the state's 13.3 percent tax threshold on individuals who earn over one million dollars: the highest rate in the nation. Athletes do get relief from their home state for days they trigger the jock tax, but when the threshold is as high as California's, they still come out on the losing end.
Is it fair? It's tough to say. But what is for certain is that it's a gigantic revenue generator for states, and considering there's just no action that athletes can take against local politicians for recourse, Raiola think it's bound to continue.
"I think the jock tax is going to continue to be enforced, because--when you think about it--a lot of the revenue comes from non-resident athletes, and with contracts getting bigger and bigger, states will continue to want their piece of the pie," he said.
Both teams need to bring their A game on Sunday. Because for one of them, it's going to just be a very expensive business trip.
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