Millionaire Migration and the Taxation of the Elite: Evidence from Administrative Data
A growing number of U.S. states have adopted ‘millionaire taxes’ on top income earners. This increases the progressivity of state tax systems, but raises concerns about tax flight: elites migrating from higher-tax to lower-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’ that 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 state from which millionaires file their taxes. Our data set contains 43 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 the borders of states. We find limited evidence of millionaire tax flight in the U.S.
Cristobal Young is assistant professor of sociology at Stanford University. He works in the overlapping fields of economic sociology, stratification, and quantitative methodology. He studies the social processes and public policies that moderate income inequality, ranging from millionaire taxes to unemployment insurance. His methodological research focuses on model uncer