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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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    File URL: https://economicdynamics.org/meetpapers/2016/paper_1566.pdf
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    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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