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IEB18-06_Agrawal+Foremny.pdf (1.25 MB)

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Working paper

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2018

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cc-by-nc-nd, (c) Agrawal et al., 2018
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/122681

Relocation of the rich: migration in response to top tax rate changes from Spanish reforms [WP]

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Abstract

A recent Spanish tax reform granted regions the authority to set income tax rates, resulting in substantial tax differentials. We use individual-level information from Social Security records over a period of one decade. Conditional on moving, taxes have a significant effect on location choice. A one percent 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. Focusing on the stock of top-taxpayers, we estimate an elasticity of the number of top taxpayers with respect to net-of-tax rates of 0.85. Using this elasticity, a theoretical model implies that the mechanical increase in tax revenue due to higher tax rates is larger than the loss in tax revenue from the out-flow of migration.

Subject

Riquesa, Distribució (Teoria econòmica), Política migratòria, Administració fiscal

Subject (English)

Wealth, Distribution (Economic theory), Tax administration and procedure

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IEB (Institut d’Economia de Barcelona) – Working Papers

Citation

AGRAWAL, David R. and FOREMNY, Dirk. Relocation of the rich: migration in response to top tax rate changes from Spanish reforms [WP]. IEB Working Paper 2018/06. [consulted: 12 of August of 2026]. Available at: https://hdl.handle.net/2445/122681

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