Tax-Induced Emigration: Who Flees High Taxes? Evidence from the Netherlands

José Victor C. Giarola, Olivier Marie, Frank Cörvers and Hans Schmeets
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José Victor C. Giarola: Maastricht University
Frank Cörvers: Maastricht University
Hans Schmeets: Maastricht University
Authors registered in the RePEc Author Service: Frank Cörvers

No 23-053/V, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We study the impact of a policy change in the Netherlands that reduced preferential tax treatment duration for high-skilled migrants arriving from specific countries in certain years. Utilizing comprehensive tax and population data, we document substantial tax-induced emigration responses, primarily driven by the top 1% of earners. Highly mobile individuals within the top 5% also emigrate sooner, particularly to competing countries offering tax-breaks to attract skilled workers. Crucially, we uncover no change in mobility behavior among lower-earning workers. The increased tax receipts from lower-income individuals who remain offset the loss from fleeing high earners, making the policy fiscally cost-neutral.

Keywords: Taxation; immigration; labor income; Netherlands. (search for similar items in EconPapers)
JEL-codes: F22 H31 J61 (search for similar items in EconPapers)
Date: 2023-10-12
New Economics Papers: this item is included in nep-eur, nep-int, nep-lab, nep-mig, nep-pbe, nep-pub and nep-ure
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