On July 22 the Pennsylvania Supreme Court granted a limited appeal to the City of Pittsburgh in the ongoing litigation over the “non-resident sports facility usage fee” or “jock tax.” The fee was permitted by the General Assembly in 2004 and the city first collected it in 2005. Professional sports leagues and athletes subject to it filed a lawsuit in 2019, and the parties have been victorious at both the Common Pleas and Commonwealth courts.
The nature of the limited appeal is that the city is permitted to argue solely on “whether the Commonwealth Court’s majority opinion departed from this Court’s precedent in Minich v. Sharon … and incorrectly interpreted the Pennsylvania Uniformity Clause to require exact uniformity in the ultimate destination of the tax revenue among residents and nonresidents, rather than ‘rough equality’ in the overall tax burden.”
That case, decided in 1951, dealt with a tax that was levied on both residents of the City of Sharon and nonresidents who worked in the city. The rate was 10 mills per dollar on both. After the City of Sharon School District levied a similar 5 mill tax, the city opted to collect only 5 mills from city residents. Nonresidents still subject to the 10 mill city tax sued. The court ruled against the plaintiffs due to crediting provisions on wage taxes imposed by local governments; the ruling preceded the Local Tax Enabling Act of 1965, which permitted most of the local non-real estate taxes paid in Pennsylvania.
Pittsburgh argued in the Commonwealth Court appeal that since nonresidents subject to the “jock tax” pay the 3 percent rate while a resident athlete or performer pays a 1 percent wage tax to the city and a 2 percent wage tax to Pittsburgh Public Schools, “…the overall tax burden is the same, the City contends that the [tax] does not violate the Uniformity Clause.”
The city’s filing in the case is due Sept. 3.
In the meantime, through June the city collected $268,747 in usage fee revenue; it budgeted $4.4 million. If the Supreme Court rules against the city, it is likely that aggrieved taxpayers will be due refunds. State law permits the city to apply the earned income tax against those subject to the fee if a court ruling should strike down the fee.
It would be informative to see a final price tag for the city’s time spent litigating the matter.
