Income Taxes and the Mobility of the Rich: Evidence from US and UK Households in Switzerland

Marko Köthenbürger, Costanza Naguib, Christian Stettler and Michael Stimmelmayr
Authors registered in the RePEc Author Service: Marko Koethenbuerger

No 10376, CESifo Working Paper Series from CESifo

Abstract: We provide quasi-experimental evidence on the income tax-induced migration of foreign high-income households living in Switzerland by exploiting the differential tax treatment of UK and US households. While the two groups are similar in terms of non-tax sorting preferences, US households are effectively insulated from Swiss income taxation due to the US world-wide income tax system. Comparing the location choices of UK households (our treatment group) with those of US households (our control group) within a one-hour commuting zone of Zurich, we find a migration elasticity with respect to the net-of-tax rate of around eight. This estimate mirrors the possibility of unrestricted migration between small Swiss municipalities with significantly different income tax rates.

Keywords: high-income households; location choice; income taxes; sorting (search for similar items in EconPapers)
JEL-codes: H24 H71 J44 R32 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-eur, nep-mig, nep-pbe, nep-pub and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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