Taxing Top Wealth: Migration Responses and their Aggregate Economic Implications

Katrine Jakobsen, Henrik Kleven, Jonas Kolsrud, Camille Landais and Mathilde Muñoz

No 32153, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Do wealth taxes lead to a harmful exodus of wealthy taxpayers? Using administrative data on wealth, firm ownership structure, and migration in Sweden and Denmark, we estimate international migration responses to wealth taxation and evaluate the aggregate economic implications of tax-induced migration. Exploiting three large reforms, we find significant migration responses to wealth taxes among the wealthy. We then investigate individual-level, firm-level, and market-level effects of these migration responses. A large fraction of wealthy taxpayers are business owners, and the employment, investments, and value-added of these businesses are negatively affected by owner out-migration. Nevertheless, the aggregate consequences of these effects are modest. We estimate that migration responses to a 1pp increase in the top wealth tax rate decrease the stock of wealthy taxpayers by less than 2% in the long run, and lead to a reduction of 0.05% in aggregate employment, 0.07% in aggregate investment, and 0.13% in aggregate value-added. Hence, our results demonstrate that trickle-down effects of tax-induced migration by the wealthy do exist, but that they are quantitatively small.

JEL-codes: D31 E21 H20 H31 L26 (search for similar items in EconPapers)
Date: 2024-02
New Economics Papers: this item is included in nep-int, nep-mig, nep-pbe, nep-pub and nep-ure
Note: CF LS PE PR
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Citations: View citations in EconPapers (2)

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