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State income taxes and team performance

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  • Erik Hembre

    (University of Illinois at Chicago)

Abstract

Professional athletes are both highly paid and highly mobile workers. Previous research has shown that athletes respond to state income taxes differentials through bargaining and migration. If athletes are compensated for state tax burden, teams located in higher taxed states may be at a competitive disadvantage. I examine the effect of state income taxes on professional sports team performance. Using within-team variation in state top marginal income tax rates, I show that, only after the availability of free agency, did state income tax increases lower team winning percentages. I find that for each percentage point increase in state income tax rates, team winning declines by 0.70 percentage points.

Suggested Citation

  • Erik Hembre, 2022. "State income taxes and team performance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(3), pages 704-725, June.
    • Handle: RePEc:kap:itaxpf:v:29:y:2022:i:3:d:10.1007_s10797-021-09685-y
    DOI: 10.1007/s10797-021-09685-y
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    References listed on IDEAS

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    More about this item

    Keywords

    Income tax; Tax incidence; Mobility; Sports;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Z23 - Other Special Topics - - Sports Economics - - - Finance

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