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THE INCOME TAX RESPONSIVENESS OF THE RICH: EVIDENCE FROM FREE AGENT MAJOR LEAGUE BASEBALL ALL‐STARS
Author(s) -
ROSS JUSTIN M.,
DUNN ROBERT R.
Publication year - 2007
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.2007.00078.x
Subject(s) - league , economics , salary , gross income , offset (computer science) , labour economics , population , demographic economics , point (geometry) , state income tax , net income , public economics , tax reform , finance , market economy , demography , physics , geometry , mathematics , astronomy , sociology , computer science , programming language
This paper examines the responsiveness of the rich to state income taxes. We use Major League Baseball free agents who were named All‐Stars at some point in their career and who signed with a U.S. team for the 1991 through 2002 seasons. This data set overcomes some of the previous difficulties encountered in similar studies but also has limitations representing the general rich population. We find evidence that the wages of this subset of players do adjust to offset the burden of state income taxes, specifically a 1% decrease in net‐of‐tax rate leads to a 3.3% increase in salary. ( JEL H20, H24, H71, R23)