Relocation of the Rich: Migration in Response to Top Tax Rate Changes from Spanish Reforms

David Agrawal and Dirk Foremny

The Review of Economics and Statistics, 2019, vol. 101, issue 2, 214-232

Abstract: A Spanish reform granted regions the authority to set income tax rates, resulting in substantial tax differentials. Using administrative data, we find that conditional on moving, taxes have a significant effect on location choice. A 1% increase in the net-of-tax rate for a region relative to others increases the probability of moving to that region by 1.7 percentage points. We estimate an elasticity of the number of top taxpayers with respect to net-of-tax rates of 0.85. The mechanical increase in tax revenue due to higher tax rates is larger than the loss in tax revenue from the net outflow of migration.

Date: 2019
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Working Paper: Relocation of the Rich: Migration in Response to Top Tax Rate Changes from Spanish Reforms (2018)
Working Paper: Relocation of the rich: migration in response to top tax rate changes from Spanish reforms (2018)
Working Paper: Relocation of the Rich: Migration in Response to Top Tax Rate Changes from Spanish Reforms (2018)
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