I didn’t think of correlating taxation, good idea, but it’s hard to quantify taxation across countries with differing methods of taxing. Even so, tax revenues as a % of gdp seem to correlate to positive migration, as well as the corporate tax rate and individual tax rate.
This is odd since the argument is that the rich will flee high-tax states in favor of low-tax states, but even on a state-level in the US, the richest states (NY, CA, CT, VT) have the highest taxes. The lowest taxes are in the southeast where poverty and lack of education abounds. So, there must be something alluring that compels the rich to continue paying the high taxes. Maybe it’s the desire to not live in a shithole?
[i]This paper examines how changes in state tax policy affect the number of federal estate tax returns
filed in each state, utilizing data on federal estate tax return filings by state and wealth class for 18
years between 1965 and 1998.
Controlling for state- and wealth-class specific fixed effects, we find
that high state inheritance and estate taxes and sales taxes have statistically significant, but modest,
negative impacts on the number of federal estate tax returns filed in a state.
High personal income
tax and property tax burdens are also found to have negative effects, but these results are somewhat
sensitive to alternative specifications.
This evidence is consistent with the notion that wealthy
elderly people change their real (or reported) state of residence to avoid high state taxes, although
it could partly reflect other modes of tax avoidance as well.
We discuss the implications for the
debate over whether individual states should “decouple” their estate taxes from federal law, which
would retain the state tax even as the federal credit for such taxes is eliminated.
Our results suggest
that migration and other observationally equivalent avoidance activities in response to such a tax
would cause revenue losses and deadweight losses, but that these would not be large relative to the
revenue raised by the tax.[/i]
It appears that the bigger deal is the estate and sales taxes (a flat tax which I despise), while the income tax is of lesser relevance.
[i]Conclusion
This paper finds that the number of federal estate tax return filers reported as residing in
each state is negatively influenced by the level of taxes imposed on high-income and
high-wealth people in that state.
The most compelling results are for estate and
inheritance taxes and sales taxes, but income taxes and property taxes have statistically
significant negative effects of similar magnitudes in some reasonable specifications.
Our evidence is consistent with the idea that some rich individuals flee states that tax them
relatively heavily, although it may reflect other modes of tax avoidance as well.
The estimated amounts of deadweight loss and revenue loss from the flight are not large
relative to revenue collected by the taxes, however. [/i]
So some rich may flee, but something else is offsetting the loss of revenue (perhaps more rich moving in).
Why do people pay the high taxes and insane prices in NY city? NY should be a ghost town from the perspective of costs, but it’s one of the most populated cities, so obviously something is offsetting the costs.