Tennessee has no state income tax and Memphis has no local payroll tax. To raise money, Memphis must increase the highest sales tax rate in the country or the highest property tax rate in the state. Both the Memphis City Council and Shelby County Commission raised property taxes this year.
The jock tax costs players a maximum of $7,500 a year. According to the fiscal note on the 2009 legislation, the total tax on NBA and NHL players this year is about $3.5 million, about half what Mike Miller will make next year when he returns to the Grizzlies.
Grizzlies fans pay a tax on seats, tickets, and concessions that helps pay the cost of the arena.
Tony Allen, who signed a new contract with the Grizzlies paying him $5 million a year, was in Nashville to oppose it. Allen, who has said he "bleeds blue," did not speak at the hearing Thursday. If he played in Georgia he would pay state income tax of 6 percent; in North Carolina, the state tab is 7.75 percent. In Tennessee, $7,500.
The Grizzlies ownership opposes killing the jock tax because the revenue is passed through to them. Jason Wexler represented the ownership group at the hearing. He told the Flyer the tax brings about $1.1 million a year to Memphis.
"We use it to recruit events to FedEx Forum," he said. "Memphis is a good market but not a must-play market. We get about ten concerts a year."
"It's working," he added. "It's an effective incentive tool."