Do State And Local Taxes Affect NBA All-Stars' Migratory Decisions?

Abstract

As high earning individuals who compete in dozens of jurisdictions, professional athletes in the U.S. are highly targeted by tax regimes. In most major American sports leagues, franchises vying for a player's talent equalize their salary offers to compensate the player for differences in state and local income taxes. However, due to the NBA's luxury tax system, franchises' abilities to equalize salaries has become very costly for franchises, putting the burden of state and local income taxes on the player. This paper examines the effect state and local income taxes have on the National Basketball Association's All-Star free agents' migratory decisions.