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State income taxes and team performance

Erik Hembre ()
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Erik Hembre: University of Illinois at Chicago

International Tax and Public Finance, 2022, vol. 29, issue 3, No 6, 704-725

Abstract: 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.

Keywords: Income tax; Tax incidence; Mobility; Sports (search for similar items in EconPapers)
JEL-codes: H23 Z23 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10797-021-09685-y

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