A Replication of â€œMillionaire Migration and State Taxation of Top Incomes
Roger S. Cohen,
Andrew E. Lai and
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Roger S. Cohen: Department of the Treasury, Trenton, NJ, USA
Andrew E. Lai: Department of the Treasury, Trenton, NJ, USA
Public Finance Review, 2015, vol. 43, issue 2, 206-225
We reevaluate Young and Varnerâ€™s (YV) study of the effect of New Jerseyâ€™s 2004 income tax increase on migration. The 2004 â€œmillionairesâ€™ taxâ€ raised New Jerseyâ€™s marginal income tax rate from 6.37 percent to 8.97 percent on incomes over US$500,000. YV reported that the tax change apparently had no effect on net out-migration of affected taxpayers (relative to other affluent taxpayers); however, this result appears to be due to their modeling New Jersey out-migration and in-migration simultaneously to determine net migration effects. Correcting for this, we find a statistically significant increase in the out-migration of taxpayers making over US$500,000 of roughly eighty per year in the years following the tax change. Given that the increase likely spurred out-migration in groups not directly taxed and discouraged in-migration, our estimates may understate the actual impact of the tax on New Jersey net out-migration.
Keywords: state income tax; top earners; migration; tax competition; millionairesâ€™ tax (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:43:y:2015:i:2:p:206-225
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