But the economic question is not whether the basketball star should play
basketball or be a model. The economic question is for which team should he
play; the one who values his services at $100,001 or another that values his
services at $1,000,000.
The same applies to land (and other resources wh
From: "Fred Foldvary" <[EMAIL PROTECTED]>
> The question under debate is whether there is neutral taxation.
> If the star plays for a team that pays him $1 million, and the government
> taxes $800,000 of that, he will continue to play, so the tax did not alter
> his incentives; the tax is neutral
Fred Foldvary wrote:
> If the economic rent is to be taxed, there are two cases:
> 1) The government knows that the basketball economic rent is $899,999, and
> that amount is taxed. The player plays for A in order to pay the tax.
> 2) The government does not know the economic rent among the baske
