Uniformity in Effect, Not Form: Denial of Local Tax Credits to Nonresidents Renders Pittsburgh’s Facility Fee Unconstitutional under Pennsylvania’s Uniformity Clause

Introduction

In National Hockey League Players Association, et al. v. City of Pittsburgh, the Supreme Court of Pennsylvania held that Pittsburgh’s “Non-Resident Sports Facility Usage Fee” (commonly known as the “facility fee”) violates the Pennsylvania Constitution’s Uniformity Clause (Article VIII, § 1). The facility fee imposes a 3% levy on income earned by each nonresident who uses a publicly funded facility in the City to engage in an athletic event or render a remunerated performance. City residents are not subject to this facility fee; they instead pay a 1% City earned income tax (EIT) and a 2% school district tax.

The plaintiffs include three major professional players’ associations (NHLPA, MLBPA, NFLPA) and several individual athletes. They argued that the City’s scheme discriminates against nonresident athletes in violation of the Uniformity Clause. The City defended the fee by asserting that residents also bear an effective 3% rate (1% to the City and 2% to the school district), thereby equalizing the burdens.

Justice Donohue, joined by Chief Justice Todd, concurred in the judgment of unconstitutionality but advanced a distinct and important rationale: even if nominal rates are equal, Pittsburgh’s regulations deliberately foreclose nonresidents’ ability to obtain statutorily authorized tax credits under the Local Tax Enabling Act (LTEA), which produces a discriminatory effect—namely, double taxation borne only by nonresidents. In her view, the Uniformity Clause requires uniformity in effect, not form; the destination of tax revenues or the tax’s label cannot save a scheme that, in operation, denies mandated credits and thereby burdens one segment of the class more heavily.

Summary of the Opinion

The Court’s majority (opinion by Justice Wecht) invalidated the facility fee under the Uniformity Clause. Justice Donohue agreed with the result but grounded her concurrence on a narrower and operational principle:

• The Uniformity Clause is concerned with the equality of the tax burden in practice, not merely the nominal rate or the tax’s label or destination.
• Pennsylvania’s LTEA guarantees credits to taxpayers for wage and income taxes paid to another municipality, including for many out-of-state residents where reciprocity exists, to avoid double taxation.
• Pittsburgh’s regulations instruct nonresident performers subject to the facility fee not to report the fee “in the local tax box on a W-2 form,” making the levy non-creditable and thereby blocking the statutory credit mechanism.
• By foreclosing credits, the City ensures that nonresident athletes can be taxed twice on the same income (once by Pittsburgh and again by their home municipality), while residents are not. That disparate effect violates the Uniformity Clause.

Justice Donohue also cautioned against elevating dicta from Danyluk v. Bethlehem Steel Co., 178 A.2d 609 (Pa. 1962), to binding status and emphasized that uniformity analysis should not turn on the formal classification of a tax or the destination of its revenues, but on the real-world burden imposed.

Analysis

Precedents Cited and Their Influence

1) Fox’s Appeal, 4 A. 149 (Pa. 1886)

An early and foundational articulation of Pennsylvania’s Uniformity Clause, Fox’s Appeal emphasizes that the Clause was designed to “sweep away forever” the legislature’s power to impose unequal tax burdens under the guise of taxation. Justice Donohue invokes this lineage to underscore that uniformity analysis centers on avoiding discriminatory burdens.

2) Clifton v. Allegheny County, 969 A.2d 1197 (Pa. 2009)

Clifton instructs courts to examine the effect of a tax scheme and whether it achieves uniformity in practice, not merely in text. Justice Donohue’s approach echoes this functional focus, treating the non-creditable structure of Pittsburgh’s fee as dispositive because of its real-world consequences for nonresidents.

3) Mount Airy #1, LLC v. Department of Revenue, 154 A.3d 268 (Pa. 2016)

Mount Airy reaffirms that a “discriminatory result” violates uniformity. Donohue leverages this principle: the City’s prohibition on claiming credits produces a discriminatory result by exposing only nonresidents to double taxation.

4) Nextel Communications of Mid-Atlantic, Inc. v. Department of Revenue, 171 A.3d 682 (Pa. 2017)

Nextel emphasizes that courts must examine how a tax functions “when applied.” This case bolsters Donohue’s insistence on looking through the form (e.g., a “facility fee” as opposed to “EIT”) to the operational mechanics (credit denial) and ultimate burden.

5) Minich v. City of Sharon, 77 A.2d 347 (Pa. 1951)

Minich is central to the concurrence. It recognizes that local taxes and tax credits work in concert to maintain uniformity. Justice Donohue accepts the majority’s point that Minich is not a “watershed” that wholly controls the case, but she regards its rationale as compelling: neutral application and availability of credits ensure uniformity, while foreclosing credits defeats it.

6) Danyluk v. Bethlehem Steel Co., 178 A.2d 609 (Pa. 1962)

The majority (per the concurrence’s description) leans on Danyluk for the proposition that a municipality cannot defend a tax’s uniformity by invoking other tax categories (e.g., school district taxes). Justice Donohue resists elevating what she views as dicta in Danyluk, invoking Leonard v. Thornburgh, 489 A.2d 1349, 1352 (Pa. 1985), which characterized that part of Danyluk as dicta. She would instead focus on the real burden on taxpayers, not the formal taxonomy of the taxes involved.

7) Nat’l Hockey League Players Ass’n v. City of Pittsburgh, 308 A.3d 318 (Pa. Commw. 2024)

President Judge Cohn Jubelirer’s dissent in the Commonwealth Court correctly observed that uniformity is about equality of tax burden but concluded the City’s scheme was uniform because residents and nonresidents each faced a nominal 3% rate. Justice Donohue agrees with the burden-centric framing but parts ways on outcome: the City’s affirmative blocking of LTEA credits means nonresidents alone suffer double taxation, destroying the equality of burdens.

Legal Reasoning in the Concurrence

Justice Donohue’s reasoning proceeds through a series of clear steps:

1. Uniformity is about the equality of burden, not labels or revenue destinations. The constitutional inquiry looks through form to function—how the tax operates in practice. This is in line with Fox’s Appeal, Clifton, Nextel, and Mount Airy.
2. On paper, both residents and nonresidents associated with City venues face a 3% exaction on income earned in Pittsburgh: residents via 1% City EIT plus 2% school district tax; nonresidents via a 3% facility fee to the City.
3. But Pennsylvania’s Local Tax Enabling Act (LTEA), 53 P.S. § 6924.317(b)-(d), prescribes a credit mechanism to avoid double taxation on the same income across municipalities. Pennsylvania residents receive credits for local wage/income taxes paid to another Pennsylvania municipality; out-of-state residents may receive credits where reciprocity exists.
4. Pittsburgh’s facility fee regime forbids nonresidents from reporting the fee as a local tax on their W-2 forms (City of Pittsburgh Non-Resident Sports Facility Usage Fee Regulations § 302(c)), thereby making the fee non-creditable. This forecloses the LTEA’s central equalizing mechanism.
5. The practical result is that nonresidents can be taxed by Pittsburgh (3%) and by their home municipalities on the same income without the benefit of credits. Residents are not exposed to that duplicative burden for the same income. This disparate effect violates the Uniformity Clause’s requirement of uniform burdens on the same class of taxpayers.
6. Minich supports the view that the neutrality (and constitutionality) of local tax schemes is assessed together with the availability of credits. Pittsburgh’s deliberate credit denial undermines that neutrality; therefore, the fee is unconstitutional.
7. Finally, disputes about whether a municipality may “rely on” other tax categories (e.g., school district revenues) miss the point. The relevant question is whether, in application, the taxpayer’s burden is uniform. The destination of funds and formal tax types are not determinative; the effect—especially the availability of credits—is.

Impact and Implications

A. Immediate impact on Pittsburgh’s facility fee

The facility fee is unconstitutional. Although the majority’s reasoning controls the judgment, the concurrence offers a compliance roadmap: if a municipality structures a nonresident levy so that it is creditable under the LTEA (and does not otherwise discriminate), the scheme is far more likely to survive Uniformity Clause scrutiny. The City’s decision to block credits was pivotal in rendering the fee nonuniform in effect.

B. Broader municipal tax administration

• Municipalities considering nonresident levies targeting performers, athletes, or other itinerant earners must ensure that such exactions are recognized as local wage/income taxes eligible for LTEA credits. Regulatory instructions and W-2 reporting conventions that make a levy non-creditable are a constitutional red flag.
• “Destination of revenue” arguments (e.g., that residents pay part of their burden to the school district) are of limited utility. Courts will look at taxpayer-level burden equality, not the ledger entries of municipal or district coffers.
• Although the majority expressed skepticism about relying on separate tax categories to justify uniformity, the concurrence clarifies that uniformity in effect is what matters. Municipalities should focus on the taxpayer’s aggregate burden on the specific income event, as tempered by the credit system the General Assembly designed.

C. Professional sports and touring entertainment

• Similar “jock” or performer-focused municipal levies in Pennsylvania risk invalidation if they are structured to avoid or block credits. This encompasses taxes or fees applied to concerts, touring shows, and other remunerated performances in publicly funded venues.
• Event promoters and teams should expect scrutiny of how local charges are reported on wage statements and whether credits will be available in performers’ home jurisdictions, especially within Pennsylvania. Non-creditable structures invite constitutional challenge.

D. Litigation posture and doctrinal development

• The concurrence fortifies an “effects-based” approach: plaintiffs challenging local tax schemes can scrutinize whether credits are allowed in practice. Documentary evidence like municipal regulations and W-2 instructions (as here) may be decisive.
• While the majority referenced Danyluk, the concurrence’s caution signals that future uniformity disputes should not hinge on formal tax categories or the mere source/destination of revenue. Instead, courts should test whether the LTEA’s credit architecture is honored and whether any group suffers a disproportionate real burden.
• The opinion integrates modern uniformity jurisprudence (Clifton, Nextel, Mount Airy) with the older but still salient insight from Minich that credits and taxes “work in concert.” That synthesis will likely shape arguments and decisions in future municipal tax cases.

Complex Concepts Simplified

• Uniformity Clause (Pa. Const. art. VIII, § 1): Requires that taxes be uniform upon the same class of subjects within the taxing authority’s territory. The focus is on equal treatment in practice, not just the tax’s wording.
• Class of subjects: Here, the relevant class is individuals earning income from performances or athletic events in Pittsburgh’s publicly funded venues. Uniformity requires equal burdens across residents and nonresidents within that class.
• Local Tax Enabling Act (LTEA) credits (53 P.S. § 6924.317(b)-(d)): Pennsylvania law directs that taxes paid to one municipality generally be credited against similar taxes owed to another, to avoid double taxation. Credits can also apply to out-of-state residents where reciprocal credits exist.
• Credit denial by regulation: Pittsburgh instructed taxpayers not to list the facility fee as a local tax on W-2 forms, making it non-creditable. This administrative choice ensured nonresidents could be taxed twice on the same income—once by Pittsburgh and again by their home jurisdiction—while residents were not.
• Uniformity in effect, not form: Courts look at how the tax scheme operates on taxpayers’ actual liabilities. Labels (e.g., “fee” vs. “tax”), categories (city vs. school district), or the destination of funds do not rescue a scheme that creates unequal burdens.
• Reciprocity: For out-of-state residents, credits against Pennsylvania municipal taxes depend on whether their home jurisdiction offers similar credits. The concurrence emphasizes that, at a minimum, Pennsylvania municipalities must not obstruct the credits that Pennsylvania law itself provides.

Conclusion

Justice Donohue’s concurrence sharpens—and operationalizes—the Uniformity Clause inquiry: the constitutional benchmark is equality of burden in practice. The City’s facility fee fails that test, not merely because of how it is labeled or to whom the proceeds flow, but because the City’s own rules block the LTEA’s tax-credit mechanism that exists precisely to equalize burdens and avoid double taxation. This foreclosure produces a discriminatory effect borne only by nonresidents who perform in Pittsburgh’s publicly funded venues.

The concurrence also offers practical guidance for municipalities: if a locality imposes taxes on nonresidents’ earnings, it must structure those levies to be creditable under the LTEA and avoid technical maneuvers (such as W-2 reporting instructions) that disable credits. Courts will examine function over form; the aggregate taxpayer burden, moderated by statutorily mandated credits, is what determines uniformity.

In the broader legal context, the opinion synthesizes modern uniformity jurisprudence with the credit-centric insights of Minich, while cautioning against overreliance on dicta from Danyluk. The upshot is a clear, effects-based rule of decision: municipal tax schemes that engineer non-creditable charges on nonresidents are constitutionally vulnerable, even if nominal rates appear equal. That principle will influence the design, administration, and defense of local taxes on athletes, entertainers, and other itinerant workers across Pennsylvania.