Baseball Salaries and Income Taxes

James Alm (), William Kaempfer and Edward Batte Sennoga

Journal of Sports Economics, 2012, vol. 13, issue 6, 619-634

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.

Keywords: tax incidence; free agents; income tax; luxury tax (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:13:y:2012:i:6:p:619-634

DOI: 10.1177/1527002511422567

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