The Income Tax Responsiveness of the Rich: Evidence from Free Agent Major League Baseball All-Stars
Justin M. Ross
Indiana University - School of Public & Environmental Affairs
Robert R. Dunn
West Virginia University - College of Business & Economics
Contemporary Economic Policy, Vol. 25, No. 4, pp. 639-648, October 2007
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.
Number of Pages in PDF File: 10Accepted Paper Series
Date posted: November 4, 2007
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