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Millionaire Migration and the Taxation of the Elite: Evidence from Administrative Data

Millionaire Migration and the Taxation of the Elite: Evidence from Administrative Data  . American Sociological Review. June, 2016. Lead Article. (with Charles Varner, Ithai Lurie, and Richard Prisinzano.)

A  growing  number  of  U.S.  states  have  adopted  “millionaire  taxes”  on  top  income-earners.  This  increases  the  progressivity  of  state  tax  systems,  but  it  raises  concerns  about  tax  flight:  elites  migrating  from  high-tax  to  low-tax  states,  draining  state  revenues,  and  undermining  redistributive social policies. Are top income-earners “transitory millionaires” searching for lower-tax places to live? Or are they “embedded elites” who are reluctant to migrate away from  places where they have been highly successful? This question is central to understanding the social  consequences  of  progressive  taxation.  We  draw  on  administrative  tax  returns  for  all  million-dollar  income-earners  in  the  United  States  over  13  years,  tracking  the  states  from  which millionaires file their taxes. Our dataset contains 45 million tax records and provides census-scale  panel  data  on  top  income-earners.  We  advance  two  core  analyses:  (1)  state-to-state  migration  of  millionaires  over  the  long-term,  and  (2)  a  sharply-focused  discontinuity  analysis of millionaire population along state borders. We find that millionaire tax flight is occurring, but only at the margins of statistical and socioeconomic significance.

American Sociological Review
2016
Charles Varner
Ithai Lurie
Richard Prisinzano