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The Income Tax Responsiveness Of The Rich: Evidence From Free Agent Major League Baseball All-Stars

Author

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  • JUSTIN M. ROSS
  • ROBERT R. DUNN

Abstract

"This paper examines the responsiveness of the rich to state income taxes. We use Major League Baseball free agents who were named All-Stars at some point in their career and who signed with a U.S. team for the 1991 through 2002 seasons. This data set overcomes some of the previous difficulties encountered in similar studies but also has limitations representing the general rich population. We find evidence that the wages of this subset of players do adjust to offset the burden of state income taxes, specifically a 1% decrease in net-of-tax rate leads to a 3.3% increase in salary. "("JEL "H20, H24, H71, R23) Copyright 2007 Western Economic Association International.

Suggested Citation

  • Justin M. Ross & Robert R. Dunn, 2007. "The Income Tax Responsiveness Of The Rich: Evidence From Free Agent Major League Baseball All-Stars," Contemporary Economic Policy, Western Economic Association International, vol. 25(4), pages 639-648, October.
  • Handle: RePEc:bla:coecpo:v:25:y:2007:i:4:p:639-648
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    References listed on IDEAS

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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
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    Citations

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    Cited by:

    1. Denvil Duncan & Ed Gerrish, 2014. "Personal income tax mimicry: evidence from international panel data," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(1), pages 119-152, February.
    2. Henrik Jacobsen Kleven & Camille Landais & Emmanuel Saez, 2013. "Taxation and International Migration of Superstars: Evidence from the European Football Market," American Economic Review, American Economic Association, vol. 103(5), pages 1892-1924, August.
    3. Candon Johnson & Joshua Hall, 2017. "Do National Basketball Association Players Need Higher Salaries to Play in High Tax States? Evidence from Free Agents," Working Papers 17-11, Department of Economics, West Virginia University.

    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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