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

David Agrawal () and Dirk Foremny ()
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Dirk Foremny: IEB, Department of Public Economy, Political Economy and Spanish Economy, Universitat de Barcelona, Facultat d'Economia i Empresa

No XREAP2018-9, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

Abstract: recent Spanish tax reform granted regions the authority to set income tax rates, resulting in substantial tax di erentials. We use individual-level information from Social Security records over a period of one decade. Conditional on moving, taxes have a significant e ect 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- ow 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: 87 pages
Date: 2018-11, Revised 2018-11
New Economics Papers: this item is included in nep-eur, nep-mig, nep-pbe and nep-ure
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http://www.xreap.cat/RePEc/xrp/pdf/XREAP2018-09.pdf First version, 2018 (application/pdf)
http://www.xreap.cat/RePEc/xrp/pdf/XREAP2018-09.pdf Revised version, 2018 (application/pdf)

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