For the last two NFL off-seasons, the subject of Los Angeles getting a pro football team has dominated sports network airwaves. Lots of commentators have thrown around the possibility of the San Diego Chargers moving north to L.A. However, during a visit to the Golden State last week, Texas Gov. Rick Perry made some comments that should have the Spanos family, the owners of the Chargers, considering a move to San Antonio instead.
Perry’s strongest argument for a Chargers move to San Antonio is the huge boost in take-home pay that players, coaches, and staff would realize simply by calling the Lone Star State home. Texas is one of nine states without an income tax, which has made it a magnet for people and employers from other parts of the country. The Chargers’ current home state has one of the most inhospitable tax climates in America.
On wages earned during home games, Chargers players, coaches, and staff currently face California’s top marginal income tax rates of 10.3 percent (for those making $250,000 or more) and 13.3 percent (for those making $1 million or more). The 13.3 percent rate was just approved by California voters last November and is the highest top state income tax rate in the nation.
Players on visiting teams would also benefit financially from a Chargers move to Texas, since professional athletes are required to pay what is known as a “jock tax” in each state they play an away game. Texas has no income tax, and therefore no “jock tax.” As the Tax Foundation explains:
“Jock tax” is a colloquial expression referring to the trend among tax authorities toward levying state and local income taxes on traveling business professionals, particularly visiting professional athletes. Jock taxes require that traveling professionals pay income taxes in every state where they earn income or have an “economic nexus.”
In 2012, the Chargers played eight of their 16 regular-season games at home in California. Their remaining games were played in states with varying state income tax rates. Philip Rivers, the Chargers’ franchise quarterback who has three years left on his six-year, $92 million contract, would yield more than $1 million in additional after-tax income if his team moved to San Antonio.
But it’s not just the top-dollar, marquee players on the Chargers’ roster that stand to benefit from a move to Texas; everyone, including third-string special teams players making the league minimum, would see a sizable boost in pay. Even the Charger Girls, the team’s official $60-per-home-game cheerleaders, stand to benefit from a move to Texas, as California’s high income tax rates would no longer apply to their paid appearances, photo shoots, and other employment opportunities.
Aside from tax relief, a move to San Antonio would offer the Chargers a new stadium, in the form of the Alamodome, saving the team and possibly San Diego taxpayers the expense of building a new one. The Alamodome — opened in 1993 — has the capacity to seat 72,000 people, or 1,439 more than Qualcomm Stadium, the Chargers’ current home. In the past five years, the Alamodome has undergone extensive renovations to enhance the fan experience.
With no income tax for the home team and zero “jock tax” liability for visiting teams, San Antonio is a very attractive destination for an NFL franchise. From 2000 to 2010, 1.2 million more Americans moved out of California than moved in, taking nearly $30 billion in income with them. Many of those people were fleeing the state’s onerous tax and regulatory burden. Texas happens to be the top destination for Golden State tax refugees. Will the Chargers be next?
Matt Blumenfeld is a state policy associate at Americans for Tax Reform.