- March 7, 1707, 319 years ago — Birth of Stephen Hopkins, signer of the Declaration of Independence.
- March 7, 1699, 327 years ago — Birth of Susanna Boylston Adams, mother of John Adams.
- March 7, 1835, 191 years ago — Death of Benjamin Tallmadge.
- March 11, 1731, 295 years ago — Birth of Robert Treat Paine, signer of the Declaration of Independence.
Essay Introduction
In this brief but striking statistical comparison, W. M. Curtiss uses the salaries of two baseball legends—Babe Ruth and Ted Williams—to illustrate the combined eroding effects of high taxation and inflation. While Ted Williams' 1950 contract appeared to be the highest in history, significantly surpassing Ruth's peak dollar salary, a closer look reveals that Williams' actual purchasing power was drastically lower. This piece serves as a potent reminder of the "money illusion," showing how government fiscal policies can turn a seeming increase in wealth into a decrease in real value.
Athletes, Taxes, Inflation
by W. M. Curtiss
Williams Signs with Red Sox for Record Baseball Pay of $125,000
BOSTON, Feb. 7 (AP)—Ted Williams, the Red Sox slugger, today signed the highest salaried contract in baseball history—for an estimated $125,000.
Babe Ruth's $80,000 salary in 1930 and '31 was tops in the old days. —The New York Times, February 8, 1950
Dollar Salaries This is a comparison of Ruth's and Williams' dollar salaries.
- Babe Ruth (1931): $80,000
- Ted Williams (1950): $125,000
Take-Home Pay But after federal income taxes, the comparison of their take-home pay changes the picture. The tax bite out of Williams' higher salary is disproportionately larger than what was taken from Ruth.
What the Take-Home Will Buy Inflation has shrunk the buying power of the dollar since 1931, so Williams' real take-home pay is only a little over half of Ruth's—57 per cent.
If Ted Williams were to have as much buying power in 1950 as Babe Ruth had in 1931, he would have to be paid $327,451.
About the Author
W. M. Curtiss, formerly Professor of Marketing at Cornell University, is a staff member of the Foundation for Economic Education. "Athletes, Taxes, Inflation" was first published in 1950.
Attribution
Curtiss, W. M. "Athletes, Taxes, Inflation." In Essays on Liberty, Vol. 1, 197. Irvington-on-Hudson, NY: The Foundation for Economic Education, Inc., 1952.
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