Two Minutes for Taxing: The Effect of Income Taxation on Player Product and Team Performance in the National Hockey League
Persistent URL
Author(s)
Hogan, Patrick
Date Issued
April 10, 2023
Abstract
The National Hockey League implemented free agency and the salary cap with the intention of ensuring league-wide competitive balance. Anecdotal evidence suggests that income taxation is undermining these efforts, and that firms in regions of low-income taxation are at an inherent advantage. Professional sports franchises in regions of high-income taxation attract less player talent in free-agency, and must pay players of similar value more to provide labor for their firm. The National Hockey League provides a unique opportunity to explore the influence of income taxation on both team performance and player product as substantial variation in rates of income taxation exist throughout the league. Citing existing studies, I argue that income taxation is inversely related to National Hockey League firm performance and measures of player product. I discuss literature pertaining to the effect of income taxation on labor migration and professional sports franchises to provide evidence and rationale as to how and why income taxation ought to influence National Hockey League firm performance and player product. Using Data from the 2017-2018 through 2021-2022 National Hockey League seasons, I employ a model of player allocation and confirm Hembre`s (2021) conclusion that income taxation inversely affects National Hockey League firm performance. Additionally, I provide evidence for the proposal of Hembre (2021) that the mechanism through which team performance is influenced by income taxation is that teams in regions of high taxation have lower player product. I do so through finding that National Hockey League franchises measures of player product: Wins Above Replacement, Goals Above Replacement, and Corsi, are inversely related to income taxation.
Major
Business
Honors
Business and Economics, 2023
First Reader(s)
Nonnenmacher, Tomas W.
Other Reader(s)
Navarro-Sanchez, Francisco
Department
Business and Economics
Type of Publication
Senior Project Paper
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Name
Patrick Hogan Senior Comp.pdf
Size
1.16 MB
Format
Adobe PDF
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