Sunday, November 12, 2017

Surprise, star scientists study the taxes they will pay & act accordingly choosing work location to help reducing them

The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists. Enrico Moretti and Daniel J. Wilson. American Economic Review, vol. 107, no. 7, July 2017, (pp. 1858-1903).

Abstract: We quantify how sensitive is migration by star scientists 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 individuals and innovative companies decide to locate, there are enough firms and workers on the margin that state taxes matter.

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