Relocation of the rich: migration in response to top tax rate changes from Spanish reforms

David Agrawal and Dirk Foremny

No 2018/06, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: A recent Spanish tax reform granted regions the authority to set income tax rates, resulting in substantial tax differentials. We use individual-level information from Social Security records over a period of one decade. Conditional on moving, taxes have a significant effect on location choice. A one percent 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. Focusing on the stock of top-taxpayers, we estimate an elasticity of the number of top taxpayers with respect to net-of-tax rates of 0.85. Using this elasticity, a theoretical model implies that the mechanical increase in tax revenue due to higher tax rates is larger than the loss in tax revenue from the out-flow of migration.

Keywords: Migration; Taxes; Mobility; Rich; Fiscal Decentralization (search for similar items in EconPapers)
JEL-codes: H24 H31 H73 J61 R23 (search for similar items in EconPapers)
Pages: 79 pages
Date: 2018
New Economics Papers: this item is included in 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 (19)

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Related works:
Journal Article: Relocation of the Rich: Migration in Response to Top Tax Rate Changes from Spanish Reforms (2019)
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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Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2018-06

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