TOPEKA, Kan. — Kansas legislators trying to lure the Kansas City Chiefs to their state argue that helping the Super Bowl champions build a new stadium could bring Kansas millions of dollars in income taxes from players and coaches, which are currently going to Missouri.
Some economists are dubious that new revenues from “jock taxes” would be significant for Kansas, and a debate over the question emerged ahead of a special session of the Kansas Legislature set to convene Tuesday. Lawmakers expect to consider a plan to authorize state bonds to help the Chiefs and professional baseball's Kansas City Royals finance new stadiums on the Kansas side of their metropolitan area, which is split by the border with Missouri.
Professional athletes and touring entertainers pay income taxes not only in their home states but also other states where they perform, if those states impose income taxes. For athletes, Kansas taxes a percentage of their income based on how many games they play in the state — so that if a visiting minor-league infielder has 12 of his team's 120 games each season in Wichita, 10% of their income is taxed.
Economists who've studied pro sports teams for decades have concluded that subsidizing their stadiums isn't worth the cost for their communities. But supporters of bringing the Chiefs and Royals to Kansas believe that skepticism doesn't properly consider taxes from the large incomes of the best professional players.
“The 53 players are making approximately $250 million, and that continues to go up, and that doesn’t include any of the executives, the coaching staff or rest of the team out there,” Korb Maxell, a Chiefs attorney, told legislators during an informational hearing Monday at the Statehouse. “You have all of the other visiting teams that are coming and always paying in those taxes as well.”
Kansas already collects some income taxes from professional athletes, though the state Department of Revenue does not have figures. The state is home to NASCAR's Kansas Speedway, professional soccer's Sporting KC and several minor league baseball and hockey teams.
Missouri is home for the Chiefs, the Royals, Major League Baseball's St. Louis Cardinals and the National Hockey League's St. Louis Blues, plus two minor-league baseball teams.
Missouri has collected nearly $34 million in income taxes from professional athletes during the current budget year that began July 1, up 9% from the $31 million collected the previous year, according to the state. However, during the current budget year, when the Chiefs won their third Super Bowl in five years, taxes from football players jumped 39% from about $14 million to $19 million.
It's not clear how much of Missouri's revenue would come to Kansas if its lawmakers succeed in attracting the Chiefs, the Royals or both.
Geoffrey Propheter, an associate professor of public affairs at the University of Colorado Denver who regularly publishes papers on sports economics, predicted that the figure for the Chiefs would be “trivial,” only a few million dollars, even if they also moved practice facilities to Kansas.
He also said lawmakers should consider additional issues that come with a new stadium, such as traffic congestion, light pollution and how rising property values make housing less affordable to local residents.
“On the Kansas side of the river, they get access to the team without paying the cost,” he said. “That’s a fantastic situation to be in.”
Others' figures for potential new income tax revenues are millions of dollars higher.
One potential issue is whether Kansas' rule could withstand a court challenge. Edward Zelinsky, a professor at Yeshiva University's Cardozo School of Law in New York City, said such rules unfairly over-tax athletes.
A tax law specialist, he’s familiar with how states tax visiting athletes. In the 1990s, Zelinsky challenged a New York rule like Kansas’ because New York taxed all of his income even though he works mostly from home in Connecticut. He lost, but in 2015, the Ohio Supreme Court ruled that visiting athletes must be taxed based on how many total work days they spend in the state — in that case, two out of 157 — instead of the games played there, a larger percentage.
Zelinsky said stadium advocates can argue that being able to tax athletes' incomes is an advantage, but it doesn't drive the economics surrounding a venue.
“It’ll be a nice chunk of change, but I wouldn’t use this to control the debate,” Zelinsky said.
Tuesday officially marks the start of a special session in the Kansas legislature. Taxes and sports stadium bills are up for discussion.
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