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Tax-Induced Emigration: Who Flees High Taxes? Evidence from the Netherlands

Author

Listed:
  • José Victor C. Giarola

    (Maastricht University)

  • Olivier Marie

    (Erasmus University Rotterdam)

  • Frank Cörvers

    (Maastricht University)

  • Hans Schmeets

    (Maastricht University)

Abstract

We study the impact of a policy change in the Netherlands that reduced preferential tax treatment duration for high-skilled migrants arriving from specific countries in certain years. Utilizing comprehensive tax and population data, we document substantial tax-induced emigration responses, primarily driven by the top 1% of earners. Highly mobile individuals within the top 5% also emigrate sooner, particularly to competing countries offering tax-breaks to attract skilled workers. Crucially, we uncover no change in mobility behavior among lower-earning workers. The increased tax receipts from lower-income individuals who remain offset the loss from fleeing high earners, making the policy fiscally cost-neutral.

Suggested Citation

  • José Victor C. Giarola & Olivier Marie & Frank Cörvers & Hans Schmeets, 2023. "Tax-Induced Emigration: Who Flees High Taxes? Evidence from the Netherlands," Tinbergen Institute Discussion Papers 23-053/V, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20230053
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    References listed on IDEAS

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    More about this item

    Keywords

    Taxation; immigration; labor income; Netherlands.;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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