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  3. American Economic Review
  4. July 2017
  5. The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists

The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists

  • Enrico Moretti
  • Daniel J. Wilson
American Economic Review
vol. 107, no. 7, July 2017
(pp. 1858-1903)
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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.

Citation

Moretti, Enrico, and Daniel J. Wilson. 2017. "The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists." American Economic Review, 107 (7): 1858-1903. DOI: 10.1257/aer.20150508

Additional Materials

JEL Classification

  • H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
  • H25 Business Taxes and Subsidies including sales and value-added (VAT)
  • H71 State and Local Taxation, Subsidies, and Revenue
  • H73 State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
  • J44 Professional Labor Markets; Occupational Licensing
  • J61 Geographic Labor Mobility; Immigrant Workers
  • R32 Other Spatial Production and Pricing Analysis