Taxing Talent in Women's Sports: Evidence from the WNBA

This paper examines whether state income tax rates affect player salaries and competitive balance in the Women's National Basketball Association (WNBA). The 2020 WNBA Collective Bargaining Agreement (CBA) increased player bargaining power by reducing barriers to player mobility and increasing maximum player salaries and team salary caps. I find that unrestricted free agents receive higher pre-tax salaries when signing with teams located in high-tax states, and this salary premium is comparable to effects found in men's leagues. Furthermore, teams located in states with higher tax rates have both lower winning percentages and rates of postseason success following the 2020 CBA. This study is the first to my knowledge examining the impact of income taxes on women's professional sports, and its findings contribute to ongoing debates about labor market frictions, tax incidence, and institutional constraints in women's professional sports.