State Taxation of Nonresident Income and the Location of Work

David Agrawal and Kenneth Tester

No 1258, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: Prior studies show that taxes matter for the residential locations of high-income earners. But, states raise a significant share of revenue from nonresidents. Using variation in state tax rates, we provide causal evidence on the effect of the net-of-tax rate on the location of labor supply for professional golfers. State taxes induce high-income earners to shift employment to low-tax states without a residence change. The elasticity of working in a state is 0.34, and consistent with superstar phenomenon, increases with earnings. Our results suggest a novel margin of mobility responses for top-earners: the spatial relocation of labor supply by nonresidents.

Keywords: state taxes; superstars; taxing the rich; avoidance; mobility; highfrequency labor supply (search for similar items in EconPapers)
JEL-codes: H26 H73 J22 J61 R50 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-pbe and nep-ure
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Related works:
Journal Article: State Taxation of Nonresident Income and the Location of Work (2024)
Working Paper: State Taxation of Nonresident Income and the Location of Work (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:1258

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