PAY AND PLAY
Arts groups rely on special tax targeting athletes, entertainers
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| Erica Burrus photo/ John Nemeth, a blue singer and harmonica player living in San Francisco, sings at BB's Jazz, Blues and Soups. As a performer living outside of Missouri, Nemeth must pay a 2-percent tax to Missouri on money he earns here. |
 
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It's a welcome sound for public arts groups including the Missouri Arts Council, but a sour note for some venues that struggle with it when booking bands.
The issue? Missouri's non-resident athlete and entertainer tax.The state taxes professional athletes and the people who travel and work with them 6 percent on what they earn here. It taxes performers and their associates 2 percent.
The Kansas City Symphony filed a lawsuit over the tax, while some Missouri legislators are backing a bill that would change how the money is allocated. Meanwhile, it seems there are few performance or sports venues where the tax goes unnoticed.
Joe Edwards of Blueberry Hill and The Pageant in The University City Loop wishes the tax would just go away.
He said it's something bands and the people who book the bands consider when deciding whether to play at one of his venues or instead play in a state that doesn't tax entertainers.
"They're young bands. They're just getting out for the first time. They're excited. Then they find out they're just scraping by to begin with on the road and they have to take 2 percent and give it to the state of Missouri for no good reason in their eyes," Edwards said. "It's something they always moan and groan about and I can see why."
Jeff Antrainer, chief financial officer of Fox Associates, which operates the Fox Theatre, doesn't dispute the tax, but he said it is a challenge when trying to book touring shows.
"When they're looking at two different cities, two different locations, they would elect one where they don't have to deal with the tax as opposed to ours where they have to deal with it," Antrainer said.
The Fox typically pays production companies right after a show and has to strip 2 percent off the total, Antrainer said.
The tax takes a greater percentage of pay from athletes, trainers and other team personnel. If these people live outside of Missouri and come here for games, they pay the tax whether they play for a St. Louis or Kansas City team or one whose home field is outside the state.
While entertainers paid $1.68 million in taxes in fiscal year 2007, athletes paid $26 million.
Groups including the NFL Players Association have opposed such taxes in the states where they have been enacted. Carl Francis, director of communications for the NFLPA, said the taxes unfairly single out athletes and do not require non-resident doctors, lawyers and businessmen who travel to the state to work to pay the same tax.
Dave Stokes, a policy analyst for the Clayton-based Show-Me Institute, said the tax is silly.
"It's a tax designed to punish a very specific group of individuals. I don't think that's proper or fair," Stokes said. "Why are we taxing one specific group of high-earners that might be in Missouri for a very limited period of time?
Stokes cited an opinion piece written by Tim Lee when he was at the Show-Me Institute. In the article, Lee traces the origin of "jock" taxes to California, where reportedly the tax was enacted to punish Michael Jordan after the Chicago Bulls beat the Los Angeles Lakers in the 1991 NBA championship series.
Illinois enacted a similar tax the next year. Some media called Illinois' version of the tax "Michael Jordan's revenge."
Missouri created its non-resident athlete and entertainer tax in 1994. The Washington, D.C.-based Tax Foundation found that by 2004, 20 of 24 states with professional sports teams had instituted non-resident athlete taxes. These states include New York, New Jersey, Pennsylvania, Massachusetts, Michigan, Colorado and Arizona.
Lee argued that the states should all simply repeal the taxes to encourage other states to follow suit.
However, some groups rely on the money to help fund their operations.
The money collected in Missouri is supposed to be divided between the Missouri Arts Council Trust Fund, the Missouri Humanities Council Trust Fund, the Missouri State Library Networking Fund, the Missouri Public Television Broadcasting Corporation Special Fund and the Missouri Historic Preservation Revolving Fund.
The Missouri Arts Council Trust Fund is allocated as much as 60 percent of the tax proceeds, while the other funds are allocated 10 percent each.
Beverly Strohmeyer, executive director of the Missouri Arts Council, said her agency has a total program budget of $5.6 million. The state's general fund and federal money account for $1.1 million of that budget, while the remainder comes from the athlete and entertainer tax.
From its budget, the Missouri Arts Council awarded $3,830,238 to 246 organizations in 2007. Groups that received the grants included the Center of Creative Arts, Compton Heights Band, Dance St. Louis, Laumeier Sculpture Park, Shakespeare Festival of St. Louis and The Black Rep.
State Rep. Ryan Silvey, R-Kansas City, is sponsoring legislation that would change how money collected from the tax is allocated. It would reduce the amount the Missouri Arts Council receives to 50 percent and use the other 10 percent or as much as $2 million to fund the annual celebration of Juneteenth in Missouri.
The Missouri General Assembly passed legislation in 2003 to recognize June 19, known as Juneteenth, as "Emancipation Day," but it did not fund the observance.
Curtis Faulkner, founding director of the Missouri Juneteenth Heritage and Jazz Festival, said the event has not been held since 2001 due to a lack of financing. He said the most the event was able to get from the Missouri Arts Council was $4,000. He last calculated the budget of the event at $1.78 million.
Faulkner said little of the money from the athlete tax goes to African-American organizations despite the fact that many of the people paying the tax are African-American.
Strohmeyer said the move would reduce funding to the Missouri Arts Council and would divert it to one organization, while the trusts currently receiving the money use it to fund multiple efforts.
While the Arts Council is eligible for 60 percent, it does not receive that much of the money. Silvey said the state funds it at less than 50 percent, so his proposed change would not affect the amount of money the Arts Council actually receives.
Juneteenth would not automatically receive the money, Silvey said, but would have to seek an allocation from the state just as the other groups do.
One group that received grants from the Arts Council, The Kansas City Symphony, has taken its fight for funding to the courtroom through a lawsuit.
Richard Miller, attorney for the Kansas City Symphony, said the state has been giving less to the Missouri Arts Council Trust Fund than it is supposed to under statute.
"They've taken the money and used it for other purposes," he said.
Last year the Kansas City Symphony received $132,296 from the Arts Council. Miller said the Symphony expected more funding through the council than it received.
"It's just a blatant disregard by this administration of their statutory obligation," Miller said.
In January, Gov. Matt Blunt's office announced the governor would recommend using the tax to send $14.6 million to the Arts Council in the fiscal year 2009 budget. The amount would be $6.8 million more than the amount allocated this year.
Stokes of the Show-Me Institute said regardless of whether the tax money is a worthwhile effort, it is still a bad tax.
"I completely think the tax should be done away with," Stokes said. "Just because one group of people makes more money you shouldn't single them out for special taxes. That's not fair and it's not good tax policy."
How much does the "Jock Tax" generate?
The Missouri Department of Revenue reports non-resident athletes and entertainers pay millions of dollars each year in Missouri taxes.
Here are the breakdowns for fiscal years 2003 through 2007:
EntertainerAthlete
2003$1,298,914.40$22,485,383.49
2004$1,859,019.57$21,764,302.68
2005$1,671,046.27$19,141,679.80
2006$1,724,853.15$22,305,976.50
2007$1,680,297.91$26,324,732.00
Grant me a wish
The Missouri Arts Council awarded grants to 246 non-profit organizations in fiscal year 2007 through money collected via the Missouri non-resident athlete and entertainer tax.
Here are the amounts of just a few of those grants:
African Heritage Association of St. Louis$10,060
Bach Society of St. Louis$7,389
Center of Creative Arts (2 grants)$27,945
Compton Heights Band$11,234
Dance St. Louis$22,639
HotCity Theatre$14,748
Jazz St. Louis$21,726
Laumeier Sculpture Park$15,281
Shakespeare Festival of St. Louis (2)$24,024
The Black Rep$32,137
What do athletes pay?
Here are the taxes per game these non-resident athletes paid in Missouri based on salary statistics from the most recent or current season.
Mayor League Baseball
Alfonso Soriano, Chicago Cubs
Salary: $14 million
Single game: $86,420
Tax at 6 percent: $5,185
Ben Sheets, Milwaukee Brewers
Salary: $12,125,000
Single game: $74,846
Tax at 6 percent: $4,491
National Football League
Matt Hasselbeck, Seattle Seahawks
Salary: $6,004,320
Single game: $375,270
Tax at 6 percent: $22,516
Larry Fitzgerald, Arizona Cardinals
Salary: $3,582,040
Single game: $223,876
Tax at 6 percent: $13,433
National Hockey League
Nicklas Lidstrom, Detroit Red Wings
Salary: $7.6 million
Single game: $92,683
Tax at 6 percent: $5,561
Nikolai Khabibulin, Chicago Blackhawks
Salary: $6.75 million
Single game: $82,317
Tax at 6 percent: $4,939
