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The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists

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  • daniel wilson

    (Federal Reserve Bank)

  • enrico moretti

Abstract

We quantify how sensitive is migration by star scientist to changes in personal and business tax differentials across states. We uncover large, stable, and precisely estimated effects of personal and corporate taxes on star scientists’ migration patterns. The long run elasticity of mobility relative to taxes is 1.8 for personal income taxes, 1.9 for state corporate income tax and -1.7 for the investment tax credit. While there are many other factors that drive when innovative individual and innovative companies decide to locate, there are enough firms and workers on the margin that state taxes matter

Suggested Citation

  • daniel wilson & enrico moretti, 2016. "The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists," 2016 Meeting Papers 1566, Society for Economic Dynamics.
  • Handle: RePEc:red:sed016:1566
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    References listed on IDEAS

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    Cited by:

    1. Dechezlepretre, Antoine & Einiö, Elias & Martin, Ralf & Nguyen, Kieu-Trang & Reenen, John Van, 2016. "Do tax incentives for research increase firm innovation? An RD design for R&D," LSE Research Online Documents on Economics 66428, London School of Economics and Political Science, LSE Library.
    2. Gordon, Grey & Guerron-Quintana, Pablo, 2019. "On Regional Borrowing, Default, and Migration," Working Paper 19-4, Federal Reserve Bank of Richmond.
    3. Pablo D Fajgelbaum & Eduardo Morales & Juan Carlos Suárez Serrato & Owen Zidar, 2019. "State Taxes and Spatial Misallocation," Review of Economic Studies, Oxford University Press, vol. 86(1), pages 333-376.
    4. Alex Bell & Raj Chetty & Xavier Jaravel & Neviana Petkova & John Van Reenen, 2017. "Who Becomes an Inventor in America? The Importance of Exposure to Innovation," CEP Discussion Papers dp1519, Centre for Economic Performance, LSE.
    5. Ross Levine & Chen Lin & Zigan Wang, 2018. "Toxic Emissions and Executive Migration," NBER Working Papers 24389, National Bureau of Economic Research, Inc.
    6. repec:eee:eecrev:v:111:y:2019:i:c:p:191-210 is not listed on IDEAS
    7. Corneo, Giacomo & Neidhöfer, Guido, 2019. "Income redistribution and self-selection of immigrants," CEPR Discussion Papers 13694, C.E.P.R. Discussion Papers.
    8. repec:eee:respol:v:47:y:2018:i:5:p:992-1005 is not listed on IDEAS
    9. Robert S. Chirinko & Ryan Chiu & Shaina Henderson, 2019. "What went wrong?: The Puerto Rican debt crisis, the "Treasury Put," and the failure of market discipline," CESifo Working Paper Series 7558, CESifo Group Munich.
    10. David R. Agrawal & Dirk Foremny, 2019. "Relocation of the Rich: Migration in Response to Top Tax Rate Changes from Spanish Reforms," The Review of Economics and Statistics, MIT Press, vol. 101(2), pages 214-232, May.
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    12. Henrik Kleven & Camille Landais & Mathilde Muñoz & Stefanie Stantcheva, 2019. "Taxation and Migration: Evidence and Policy Implications," NBER Working Papers 25740, National Bureau of Economic Research, Inc.
    13. Rickman, Dan S. & Wang, Hongbo, 2018. "U.S. State and Local Fiscal Policy and Economic Activity: Do We Know More Now?," MPRA Paper 88422, University Library of Munich, Germany.
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    15. Alex Bell & Raj Chetty & Xavier Jaravel & Neviana Petkova & John Van Reenen, 2019. "Do Tax Cuts Produce More Einsteins? The Impacts of Financial Incentives vs. Exposure to Innovation on the Supply of Inventors," CEP Discussion Papers dp1597, Centre for Economic Performance, LSE.
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    17. Xavier Giroud & Joshua Rauh, 2017. "State Taxation and the Reallocation of Business Activity: Evidence from Establishment-Level Data," Working Papers 17-02, Center for Economic Studies, U.S. Census Bureau.
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    20. repec:ucp:jpolec:doi:10.1086/700760 is not listed on IDEAS
    21. Kleven, Henrik & Landais, Camille & Munoz, Mathilde & Stantcheva, Stefanie, 2019. "Taxation and Migration: Evidence and Policy Implications," CEPR Discussion Papers 13649, C.E.P.R. Discussion Papers.
    22. Ufuk Akcigit & John Grigsby & Tom Nicholas & Stefanie Stantcheva, 2018. "Taxation and Innovation in the 20th Century," NBER Working Papers 24982, National Bureau of Economic Research, Inc.
    23. repec:eee:pubeco:v:167:y:2018:i:c:p:293-324 is not listed on IDEAS

    More about this item

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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