Analysis looks at state income taxes and pro sports team competitiveness

State and local income tax written in a note

Might state income taxes impact how competitive a state’s sports teams are? A recent informal analysis by an economist looked into this issue.

The economist compared the state income tax rates and winning percentages of teams in the National Football League, the National Basketball Association, Major League Baseball and the National Hockey League. In making these comparisons, the economist took efforts to control for other factors that he identified as having the potential to impact a team’s competitiveness.

The analysis indicated that, since the 1990s, when other factors are controlled for, teams in states with lower tax rates have tended to have slightly higher winning percentages than teams in states with higher tax rates. The league in which state income tax rate showed the biggest impact on winning percentage was the NBA. Meanwhile, the league in which it showed the least impact was the MLB. As a note, the MLB doesn’t have a salary cap.

Why might state income tax rate impact the competitiveness of a state’s sports teams? Among the possibilities are that higher state income tax rates combined with salary caps might make it harder for a team to attract and sign top players.

This analysis underscores a larger point, and that is that taxes are interconnected with a many different parts of our society and lives and have the potential to impact a wide range of things, including things that one might not directly connect with taxes.

Among the things state income taxes and issues related to such taxes have the potential to have significant impacts on are the lives of the state’s residents. For example, when a person incurs a large state tax debt or runs into other problems regarding state taxes, the matter and the decisions they make in trying to address the matter can have wide-ranging impacts on their future, financially and otherwise. So when responding to state tax problems, a Missouri taxpayer may desire guidance from an experienced tax lawyer.

Source: The Washington Post, “Study: Blue-state politicians are undermining their home-state sports teams,” Max Ehrenfreund, April 24, 2017

Posted in