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Baseball Salaries and Income Taxes

Author

Listed:
  • James Alm
  • William H. Kaempfer
  • Edward Batte Sennoga

Abstract

In this article, the authors examine the impact on the salaries of free agents in Major League Baseball (MLB) of differences in state and local individual income taxes between major league cities, in an attempt to see if income taxes affect player salaries. This basic specification suggests that each percentage point of an income tax raises free agent salaries by $21,000 to $24,000; other estimates indicate even larger impacts. These findings suggest that the existence of this additional salary demand means that low-tax cities (e.g., Florida, Texas, and Washington) have a “home field advantage†in the baseball free agent market.

Suggested Citation

  • James Alm & William H. Kaempfer & Edward Batte Sennoga, 2012. "Baseball Salaries and Income Taxes," Journal of Sports Economics, , vol. 13(6), pages 619-634, December.
    • Handle: RePEc:sae:jospec:v:13:y:2012:i:6:p:619-634
    DOI: 10.1177/1527002511422567
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    References listed on IDEAS

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