Mains: Do teams in high-tax states pay a penalty in the standings?

From SABR member Rob Mains at Baseball Prospectus on May 18, 2017:

The Wall Street Journal op-ed section is not known for its fondness for taxes. So it wasn’t a surprise, at least in terms of the editorial board’s predilections, to see this headline earlier this month: “Tax Rates and Professional Losers: A new study says high taxes could cost your team a championship.”

I’ve included a link, but the article is behind the WSJ’s paywall, so I’ll summarize the argument for non-subscribers. The key paragraph:

Erik Hembre, an economist at the University of Illinois-Chicago, looked at the question: Do tax rates affect a team’s performance? He analyzed data in professional football, basketball, baseball and hockey between 1977 and 2014. Since the mid-1990s, he writes, “a ten percentage point increase in income tax rates is associated with between a 1.9-3.0 percentage point decrease in winning percentage.”

In other words, the higher your state taxes, the worse your professional sports teams.

Read the full article here (subscription required): http://www.baseballprospectus.com/article.php?articleid=31855

This page was last updated May 18, 2017 at 4:06 pm MST.