Pennsylvania Supreme Court rules Pittsburgh's nonresident pro athlete tax is unconstitutional

The Pennsylvania Supreme Court ruled that Pittsburgh's nonresident athlete tax is unconstitutional.

The court struck down the tax on nonresident professional athletes on Sept. 25, agreeing with lower courts that found the tax was unconstitutionally discriminatory, Legal Newsline reported Tuesday.

The ruling is a win for the NHL, NFL, and MLB, which were joined in the legal challenge by hockey players Kyle Palmieri and Scott Wilson, and former MLB player Jeff Francoeur. The lawsuit was filed six years ago in the Allegheny County Court of Common Pleas, complaining, among other issues, that Wilson had to pay Pittsburgh $6,000 in 2016.

The City of Pittsburgh argued that it had the right to tax athletes up to 3% to make back the money that was poured into the construction of its major sports stadiums with taxpayer funding.

“[W]e must determine whether there exists ‘some concrete justification’ for treating the relevant taxpayers as members of distinguishable classes,” wrote state Supreme Court Justice David Wecht.

“Absent such a legitimate distinction, the imposition of unequal tax burdens upon similarly situated taxpayers is unconstitutional. Here, the City does not provide concrete reasons that would justify taxing nonresident athletes and entertainers more than resident athletes and entertainers.”

While athletes and entertainers were exempt from Pittsburgh's 1% earned income tax, they still paid 3% of what they earned in the city. Residents pay 1% to Pittsburgh and 2% to the school district.

Pittsburgh argued that there was no discrepancy because both paid a total of 3%. However, the state Supreme Court found that wasn’t the case after analyzing the state’s history of nonresident taxes and rejecting the idea from a previous ruling in a case involving the City of Sharon.