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Do National Basketball Association players need higher salaries to play in high tax states? Evidence from free agents

Author

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  • Candon Johnson
  • Joshua Hall

Abstract

This article investigates the impact of taxes on the salaries received by National Basketball Association free agents from 2010 to 2014. High state income tax rates affect the after-tax income received by players from their team as well as on any ancillary income. Using data on 576 free agents, we find statistically significant evidence that free agents signing in high tax states receive higher salaries, ceteris paribus. Our results suggest that a one-unit increase in the Average Tax Rate experienced by a free agent in a state leads to free agent salaries being over $60,000 higher.

Suggested Citation

  • Candon Johnson & Joshua Hall, 2018. "Do National Basketball Association players need higher salaries to play in high tax states? Evidence from free agents," Applied Economics Letters, Taylor & Francis Journals, vol. 25(5), pages 359-361, March.
    • Handle: RePEc:taf:apeclt:v:25:y:2018:i:5:p:359-361
    DOI: 10.1080/13504851.2017.1324194
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    Cited by:

    1. Candon Johnson & Eduardo Minuci, 2020. "Wage discrimination in the NBA: Evidence using free agent signings," Southern Economic Journal, John Wiley & Sons, vol. 87(2), pages 517-539, October.
    2. Joseph Kuehn & Filippo Rebessi, 2023. "The Importance of Team Fit for NBA Rookies’ Career Earnings," Journal of Sports Economics, , vol. 24(3), pages 285-309, April.

    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

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