Not that they would be rooting for the Astros, but the people in Philadelphia’s Revenue Department had at least 90,000 reasons to cheer the arrival this week of the likes of José Altuve, Alex Bregman, Ryan Pressley, and Justin Verlander.
Based on published salary figures and the city’s formula, a conservative estimate is that the Houston Astros players will have kicked in over $90,000 in wage-tax revenues to the city treasury for a four-day visit. Verlander, himself, is pitching in an estimated $15,000 or so of that. That’s about what the average Philadelphia wage earner might pay in taxes on earned income in a 10-year period.
Monday’s rainout was a bonus for the city: It counted as a workday and forced the Astros to stay in town Thursday, and be billed for an extra day.
Rebecca Lopez Kriss said they’ll also have to pay taxes on their shares of the World Series prize money — an estimated $50 million last year — which is divided between the two teams.
“Welcome to the City of Brotherly Love,” said Stephen Kidder, an attorney with Hemenway & Barnes, in Boston, a tax specialist representing the professional baseball, football, basketball, and hockey players associations. He added that Philly was a “pioneer” in the pursuit of collecting taxes from visiting athletes.
“It was seen as an easy source of revenue from people who can’t vote against you,” he said. “So why not.”
That said, he added, visiting athletes, entertainers, and anyone else doing business in Philly should be paying the tax.
A brief history
It is only in the last 30 years that cities have become diligent about going after out-of-town players for tax money, said Kidder.
“The first two states that ventured into the arena were California and New York,” he said, but it was Philadelphia in 1993 that elevated the game to another level.
Philadelphia hired an attorney to go after deadbeats. He sent letters to 10,000 athletes demanding payments for past taxes, recalled Kidder, who added that the attorney eventually negotiated a “painful but reasonable agreement” on behalf of the alleged delinquents.
Since then, he said, cities have been diligent about seeing that the taxes are paid, although the computations can get quite convoluted.
This gets complicated
In the athletic taxing universe, Philly plays fair, says Kidder. It has established guidelines for what constitutes a “duty day” for which one would be required to pay the wage tax, 3.07% of salary for nonresidents.
(Pittsburgh, by contrast, was billing visiting players 3% of their salaries during their work time in the Steel City for what it called a “sports facility usage fee,” he said. A judge in September ruled that it targeted a specific group unfairly and, thus, violated the “uniformity clause” of the state constitution. Pittsburgh has appealed.)
“You are liable for taxes wherever you earn income,” said Kidder, but he added that a whole lot of people in other professions who do business in Philadelphia likely get away with avoiding them. “Their salaries aren’t public, their schedules aren’t public,” he said. “It’s not going to be administratively feasible for a jurisdiction to go after them.”
Conversely, athletes perform very much in public and their salaries are widely publicized and available to taxing authorities.
Players are subject to different taxation rules in different cities and states. This requires accounting gymnastics.
Typically, Kidder said, Major League players usually are “working every day,” starting with spring training and continuing for about 220 days.
So to take the example of Verlander and his $25 million annual salary, the four-day World Series stint in Philadelphia would make roughly $460,000 of his pay subject to the 3.444% nonresident wage tax. That comes to a bill of about $15,000.
To make sure the deductions are made properly, “It really falls on the clubs,” said Kidder. For the players, “It’s a challenge. These guys are filing 10,11,12 returns around the country.”
Lopez Kriss says the players know the drill: “This is not their first trip to the rodeo.”
A grand slam
The Phillies suffered the ignominy of being no-hit on Wednesday, but by any accounting it has been a fantastic week for the city overall and the treasury, and the wage-tax bounty is only a small part of the harvest.
It will take awhile to calculate the amounts, the city says, but it clearly has been reaping a sales- and drink-tax bonanza from the stadium concessions and the 5% amusement tax attached to all 140,000-plus tickets sold for the three World Series games in Philly.
The Astros and visiting fans also have been paying the city’s 8.5% tax on hotel rooms — over and above the state’s 7%. When dining or shopping, they have been subject to the city’s 2% sales levy — in addition to the state’s 6% — a 10% add-on to any alcoholic drinks, and 1.5 cents extra per ounce for a sweetened beverage.
The city’s tax harvest also includes all the ancillary taxes generated by the eating, drinking, and souvenir buying of Phillies fans and World Series visitors who might like what they’ve experienced so much that they’ll come back.
Said Lopez Kriss, “It’s truly great.”
Staff writer Joseph N. DiStefano contributed to this article.
