Before Bryce Harper signed his record 13-year, $330 million contract with the Philadelphia Phillies, two California teams, the Los Angeles Dodgers and the San Francisco Giants, remained strong contenders for Harper’s skills. Some claim that California’s high state income tax rates were the final nail in the coffin that sent Harper to Philadelphia, especially after it was reported that the Giants were asked to beat the winning bid by nearly $20 million, supposedly to overcome the tax differential. California’s top marginal income tax rate is 13.3 percent, whereas Pennsylvania has a flat income tax of 3.07 percent.
Do pro sports teams based in lower-income-tax states have an advantage over their higher-taxed counterparts? Some, like David Boaz of the libertarian Cato Institute, seem to think so. But the effect of state income tax rates on free agent decisions is often exaggerated.
Flying in the face of the argument is the 10-year, $300 million megadeal infielder Manny Machado just signed with the San Diego Padres. Machado signed for big dollars in high-tax California, even though he was being courted by other teams, including Philly. True, the Phillies may have preferred Harper over Machado, but it wasn’t out of the question for them to sign both players to large deals.
The debate over home-state tax rates is interesting, but it’s also complicated. In addition to paying taxes to their home state, professional athletes often have to pay income tax to the localities in which they play. This means that basing a decision on income tax liability requires the player also to consider their team’s opponents and travel schedule. Since just fewer than half of a team’s games are intra-division, they’ll have to consider where their division rivals are located and their tax rates. In the end, all players are going to end up paying a lot in taxes, and filing is going to be a nightmare no matter where they play.
Besides, Harper would be able to partially shelter himself from the California tax liability by establishing Nevada as his domicile. As D.C. sports fans know well, Harper is a fan of the Vegas Golden Knights and a Nevada native, so it’s likely he would make Nevada his domicile anyway. Had Harper chosen San Francisco, he wouldn’t have been the first Giant to live out of state. Precedent has already been set by beloved broadcaster Mike Krukow who is a resident of Reno, Nevada. Nevada also wouldn’t have been his only option. Infielders Brandon Crawford and Evan Longoria have homes in neighboring Arizona, and many other players maintain off-season homes.
With so many factors at play on the tax front, it doesn’t seem likely a player would let his tax liability be the deciding factor. There are other things to consider. A more likely explanation for Harper’s decision is the 81 games he now gets to play at Citizens Bank Park. As ESPN’s MLB Park factor demonstrates, the home of the Philadelphia Phillies is more home-run friendly than the Giants’ and Dodgers’ home parks. Harper’s new home has ranked in the top 10 in this metric over the past five seasons. The Giants’ newly renamed Oracle Park has ranked 30th in home-run friendliness in all but one season over that same stretch. It jumped to 29th in 2018.
Harper also puts up better numbers in Philly. His slash line (BA/OBP/SLG) of .268/.365/.564 across 50 games at Citizens Bank Park is comparable to his home numbers at Nationals Park where he slashed .284/.394/.518 and his career slash line of .279/.388/.512. In contrast, his numbers in 18 games at Dodger Stadium and 19 games at Oracle Park are .242/.307/.364 with 2 HRs and 6 RBIs and .164/.305/.284 with 2 HRs and 6 RBIs, respectively. To be fair, the sample size for games played at the two California ballparks is small, but when you take into account that they are also among the most pitcher-friendly parks overall, it’s reasonable to project Harper’s season stats would have taken a hit.
For an offense-reliant player with declining defensive metrics, Harper is better served playing most of his games at a hitter-friendly park with a manageable outfield to defend. He found a great pairing at Citizens Bank Park.
There are certainly plenty of reasons to criticize high state income tax rates, like driving people away into low-tax states. But losing out on a superstar free agent isn’t one of them. Bryce Harper did have a financial decision this off-season, but he also had to decide where he wanted to play baseball. He chose more home runs in Philadelphia over more outs in California.
Trevor Carlsen (@t_carlsen) is a fellow in America’s Future Foundation’s Writing Fellows Program.
