News Story

Detroit Tax Officials Eye Blake Griffin’s $171M Salary

City one of several around the country that impose narrow ‘jock taxes’

As part of basketball star Blake Griffin’s unexpected trade to the Detroit Pistons, the team will assume the five-year $171 million contract he had signed in summer 2017.

This will mean a financial windfall for the city of Detroit, which imposes a tax on nonresidents who work within its borders, including professional athletes.

If Griffin does not become a resident of Detroit, he would pay the city an estimated $191,000 over a full season. That’s at a rate of 1.2 percent annually, which is levied against how much of his pay is earned within the city limits.

If Griffin chooses to become a Detroit resident, he will — if he lives in the city the entire season — pay the resident income tax rate of 2.4 percent, boosting his annual payments to $382,000.

Those calculations are based on Griffin’s base salary of $31.9 million in 2018-19. Similar taxes are levied in other cities. They have been dubbed “jock taxes” because cities make specific rules to apply the income tax to highly paid professional sports athletes.

The projections of Griffin’s Detroit tax liability come from James Hohman at the Mackinac Center for Public Policy. They are based on guidelines and examples provided to the Mackinac Center by the city of Detroit’s attorney on income tax matters, in documents containing the city’s policy as of March 1, 2017. The methodology for applying the income tax to visiting athletes is outlined in a six-page document, with the tax based upon how many work days the athlete spends within the city limits.

“Even that calculation could be altered by injury, sickness, bereavement leave, required versus voluntary attendance policies, etc.,” said Robert Forrest, who is a tax expert hired by Detroit to work on income tax issues.

Griffin was introduced to Detroit fans on Wednesday.

Griffin will enjoy some financial advantages in leaving California for Michigan. The state income tax in Michigan is 4.25 percent. He’ll pay additional 2.4 percent city income tax if he lives in Detroit, or a 1.2 percent “commuter tax” if he lives in the suburbs. By comparison, California has no local income tax, but it does levy a 13.3 percent state income tax on all income over $1 million.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.