State Income Taxes Aren’t Hurting California’s Baseball Teams

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

LA Times columnist George Skelton has long been a critic of California’s progressive tax structure

He has a point: the system produces volatile revenues. The counter to that is, of course, that overwhelming amounts of taxes come from the rich because they make overwhelming amounts of the income.

But his latest argument—that the state’s high taxes on high incomes are hurting our Major League Baseball teams—goes way too far, and beyond this back-and-forth.

Skelton was responding to star outfield Bryce Halper’s decision to spurn the Dodgers, Padres, and the Giants and sign a contract with the Philadelphia Phillies. The Phillies offered more than the California teams – 13 years, $330 million—but Skelton suggests the California teams were even further behind because of our 13.3 tax rates for the highest incomes. He writes;

By contrast, Pennsylvania has a low flat rate for every taxpayer regardless of income. It’s just 3.07%. That’s one reason why superstar slugger Bryce Harper signed an eye-popping 13-year, $330-million contract last week with the Philadelphia Phillies, spurning the Dodgers and Giants.

Harper will save tens of millions in taxes by signing with the Phillies instead of a California team….

Game-changing stars have the ability to choose teams in low-tax states — even in no-tax states like Texas or Washington.

That’s all fair enough. But the problem with Skelton’s argument is more fundamental—and highly relevant to the state’s problems. And that problem is this; individual star players don’t win baseball games. Teams do.

A team that spends more money on one player like Harper has less money to spend all the other players. The big-money signing of Harper probably makes his team weaker. The California teams in this case have indicated that they didn’t want to spend too much on one player.

As my friend and California Cracku8p co-author Mark Paul pointed out on Facebook, our state’s high taxes haven’t hurt California’s teams by the measure of how the teams do. Mark wrote:

Since Reagan raised the top rate to 10 percent in 1967, California’s 5 teams have appeared 20 times in 50 World Series. The 5 teams from states with no state income tax have appeared 7 times.

California’s teams have been wise to avoid the giant free agent signing. California and its governments should behave the same way. They should think less about how high taxes affect a small group of very rich taxpayers. And they should think less about trying to lure one big business.

Instead, they need a tax system that works for the whole team—the whole state.

The system we have should be simpler, and it should produce more revenues, and have fewer economic distortions. But how it affects Bryce Harper shouldn’t be a concern.

If Harper really signed with the Phillies to avoid paying California taxes, well, then he’s getting what he deserves—having to work and play in Philadelphia. Boo!

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