--- Eric Crampton <[EMAIL PROTECTED]> wrote: > On Sat, 18 Jan 2003, Fred Foldvary wrote: > > > 2) The government does not know the economic rent among the basketball > > teams, but it does know that the next best opportunity if he does not > play basketball is $100,000. The government taxes the income above $100,000 at, say, 90 percent, providing an incentive for the player to accept the best offer, but still taking most of the economic rent. << > > Ummm...wouldn't we rather quickly see teams stop offering wages above > $100K and offering in-kind benefits instead?
Not if the benefits are taxed the same as wages. The issue is whether there is a neutral tax, and I concocted an example of one. The example premise is that income above $100K is taxed at 90%, and in-kind benefits are income. This is an example for illustration, and bringing in other data changes the premise. Fred Foldvary ===== [EMAIL PROTECTED]
