I don’t particularly like soccer and I’m not normally a fan of the research of Professor Emannuel Saez, so it is rather surprising that I like Professor Saez’s new research on taxes and soccer.
While Saez may have a reputation for doing work that often is used by advocates of class warfare, his latest research is classic, supply-side economics. He and his co-authors studied soccer players and found that they are very sensitive to marginal tax rates.
They even confirmed that the Laffer Curve is sometimes so strong that governments can collect more revenue by reducing tax rates on the rich. Krugman won’t be happy about this.
Here are some segments from a story about the research in the Christian Science Monitor.
…on one subject, Europe’s soccer stars have an important message for Americans: Tax rates. It turns out that highly paid soccer players are sensitive to taxes. They tend to move to those nations that give them a break. Why is Spain’s top league a sudden soccer powerhouse? One reason is tax policy. Why are Denmark and Belgium’s leagues stronger than in other similar countries? Ditto. In perhaps the first study to provide compelling evidence of a link between tax rates and worker migration, three economists look at this highly paid, highly mobile workforce and make several surprising conclusions: 1) Top marginal tax rates matter to big earners. 2) If you’re going to cut taxes to lure such highly skilled workers, make it a big tax cut. Otherwise, it won’t have much effect. …Professor Saez and his colleagues found something striking: The leagues in low-tax nations attracted better players and had better teams. The effect was also pronounced in individual nations that reformed their taxes. For example, Spain in 2004 introduced a new flat rate of 24 percent for foreign soccer players, nearly half the top marginal rate it charged its residents. After that law – called the “Beckham law” because British star David Beckham took advantage of it – Spain saw its share of foreign players increase while the foreign talent in nearby Italy shrank. Tax cuts for foreign players in Denmark and Belgium had similar effects.
[…] That’s true in the United States. And it’s true overseas. […]
[…] there are many other examples from Europe dealing with soccer and […]
[…] there are many other examples from Europe dealing with soccer and […]
[…] affect both the decisions of players and the success of […]
[…] This makes sense. […]
[…] Even soccer players become supply-side economists! […]
[…] Monaco et non pas à baisser les impôts en France. Au moins, le gouvernement espagnol avait créé un régime spécial de faible imposition pour les joueurs de football quand il fût confronté à la concurrence des clubs de football […]
[…] At least the Spanish government, when confronted by competition from soccer clubs in other nations, created a special low-tax regime for soccer […]
[…] since even left-leaning economists have confirmed that tax rates have a big impact on the decisions of such athletes, I hope French sports fans won’t mind if all the best players decide to take their talents […]
[…] just as is the case with athletes like Pacquiao (and soccer players), wealthy investors and entrepreneurs also have the ability to take advantage of tax competition by […]
[…] I’m thinking this habit of accidentally helping the other side should be called the “Own-Goal Effect,” even though I generally don’t like anything associated with soccer (with one very important exception). […]
This is NO proof of supply-side economics and only proves soccer players tend to migrate to countries with a lower tax rate. Very disingenuous to claim this supports the Laffer Curve. Your link to the CSM article proves it:
“Even though their top tax rates are relatively high, European nations would not get more revenue by cutting them overall. But in a few of those nations, dropping the rate specifically for high-skilled foreign workers could swell the tax coffers.”
[…] good idea to go overboard. The United Kingdom shows what happens if politicians get too greedy and Spain shows what happens if marginal tax rates are reasonable. Rate this:Share […]
[…] the past few years, I’ve shown lots of evidence from around the world (England, Spain, and France) and in various states (Illinois, Oregon, Florida, Maryland, and New York) to make the […]
[…] Cato: Over the past few years, I’ve shown lots of evidence from around the world (England, Spain, and France) and in various states to make the case that it is foolish to ignore the Laffer Curve. […]
[…] the past few years, I’ve shown lots of evidence from around the world (England, Spain, and France) and in various states (Illinois, Oregon, Florida, Maryland, and New York) to make the […]
[…] the past few years, I’ve shown lots of evidence from around the world (England, Spain, and France) and in various states (Illinois, Oregon, Florida, Maryland, and New York) to make the […]
Notice how the class warfare charges never apply to sports stars and those in Hollywood?
For some reason, they are allowed to act as rational economic actors without instant demonization.