Related to the Economics in Practice: Tax Rates and Migration in Europe In 2014,

Question

Related to the Economics in Practice: Tax Rates and Migration in Europe In 2014, the Spanish govemment passed a law to change a regulation, known as the "Beckham law", on foreign athletes This new law will require foreign professional athletes to pay the standard Spanish tax rate of 52 percent on eamings of more than 300,000 euros, up from the 24 percent rate they had been paying since 2005 For top-quality players, the elaslicity of migration under the Beckham law was estimated to be 1 81 based on the average annual tax rate. Using this estimate of elasticity, the migration of top quality players to Spain should decrease by ?%. Round your response to the nearest two decimal places

Explanation / Answer

Migration elasticity = % decrease in number of migration/% increase in tax rate

% increase in tax rate = (52-24)/24 = 116.67%

1.81 = % decrease in number of migration / 116.67%

% decrease in number of migration = 1.81*116.67%

% decrease in number of migration = 211.17%

So, migration of top quality players, will decrease by 211.17%

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---