Saturday, November 30, 2013

Bring 'em, like Beckham

Saez, Emmanuel, that's who; Cut their taxes and they will come;
...we find that location elasticities are largest at the top of the ability distribution and negative at the bottom due to ability sorting effects, and that cross-tax location elasticities between foreign and domestic players are negative due to displacement effects. To our knowledge, the paper provides for the first time compelling evidence of a link between taxation and international migration.  As shown in the case of Denmark, football players are likely to be a particularly mobile segment of the labor market, and our study therefore provides an upper bound on the migration response for the labor market as a whole. The upper bound we find is large, suggesting that mobility could be an important constraint on tax progressivity.
The evidence from European tax and regulation changes;
 (a) the 1995 Bosman ruling which liberalized the European football market, (b) top tax rate reforms within countries, and (c) special tax schemes offering preferential tax rates to immigrant football players [like Spain's 2005 Beckham Law and Denmark's 1992 Researcher's Tax Scheme]. We start by presenting reduced-form graphical evidence showing large and compelling migration responses to country-specific tax reforms and labor market regulation
Must have tasted like vinegar for Saez. The Spanish law offered an optional 24% flat tax to David Beckham and colleagues, while Denmark's 25% rate was open to all categories of employment, not just footballers (soccer players).

However, he seems to think a country can make it up on volume (higher tax rates on those lower skilled homeboys with fewer options).  Or maybe Europe could create a cartel amongst themselves....

No comments:

Post a Comment