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

David R. Agrawal, Dirk Foremny

Research output: Contribution to journalArticlepeer-review

32 Scopus citations

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.

Original languageEnglish
Pages (from-to)214-232
Number of pages19
JournalReview of Economics and Statistics
Volume101
Issue number2
DOIs
StatePublished - May 1 2019

Bibliographical note

Publisher Copyright:
© 2019 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

ASJC Scopus subject areas

  • Social Sciences (miscellaneous)
  • Economics and Econometrics

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