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A voluntary brain-drain tax

  • Wilson, John Douglas

A major roadblock to the implementation of Bhagwati's proposal to allow developing countries to tax skilled emigrants residing in developed countries (the "brain drain") is the administrative problems associated with collecting this tax in the absence of developed-country cooperation. This paper provides a partial solution to these problems, involving the tax treatment of emigrants who return to their countries of origin. The tax system is structured so that returning emigrants who previously paid the brain-drain tax face lower tax payments than those who evaded the brain-drain tax. Given the expected value of this tax benefit, emigrants are willing to pay the brain-drain tax. In the basic model, a source country's optimal tax system includes this brain-drain tax and does not distort migration decisions.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 92 (2008)
Issue (Month): 12 (December)
Pages: 2385-2391

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Handle: RePEc:eee:pubeco:v:92:y:2008:i:12:p:2385-2391
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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  1. Mirrlees, J. A., 1982. "Migration and optimal income taxes," Journal of Public Economics, Elsevier, vol. 18(3), pages 319-341, August.
  2. Bucovetsky, Sam & Wilson, John Douglas, 1991. "Tax competition with two tax instruments," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 333-350, November.
  3. Gordon, Roger H, 1986. "Taxation of Investment and Savings in a World Economy," American Economic Review, American Economic Association, vol. 76(5), pages 1086-1102, December.
  4. Stark, Oded & Wang, Yong, 2001. "Inducing Human Capital Formation: Migration as a Substitute for Subsidies," Economics Series 100, Institute for Advanced Studies.
  5. Bhagwati, Jagdish N. & Hamada, Koichi, 1982. "Tax policy in the presence of emigration," Journal of Public Economics, Elsevier, vol. 18(3), pages 291-317, August.
  6. Wilson, John Douglas, 1992. "Optimal Income Taxation and International Personal Mobility," American Economic Review, American Economic Association, vol. 82(2), pages 191-96, May.
  7. Wilson, John D., 1980. "The effect of potential emigration on the optimal linear income tax," Journal of Public Economics, Elsevier, vol. 14(3), pages 339-353, December.
  8. Wilson, John D., 1982. "Optimal linear income taxation in the presence of emigration," Journal of Public Economics, Elsevier, vol. 18(3), pages 363-379, August.
  9. Jagdish N. Bhagwati, 2004. "In Defense of Globalization: It Has a Human Face," Rivista di Politica Economica, SIPI Spa, vol. 94(6), pages 9-20, November-.
  10. Dustmann, Christian, 2003. "Return migration, wage differentials, and the optimal migration duration," European Economic Review, Elsevier, vol. 47(2), pages 353-369, April.
  11. Michael Keen & Jenny Ligthart, 2006. "Information Sharing and International Taxation: A Primer," International Tax and Public Finance, Springer, vol. 13(1), pages 81-110, January.
  12. Desai, Mihir A. & Kapur, Devesh & McHale, John & Rogers, Keith, 2009. "The fiscal impact of high-skilled emigration: Flows of Indians to the U.S," Journal of Development Economics, Elsevier, vol. 88(1), pages 32-44, January.
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