Will rich people flee the U.S. if their taxes are raised?
Do such claims pass the test of, er, evidence? In a word, no. In four words: no, not at all.
Bruce Bartlett now has a fine piece in the New York Times skewering these and other claims. There does seem to be a sharp rise in expatriation since 2006, it is true, but it seems likely that the vast bulk of those expatriates are doing so for non-tax reasons, and these numbers are in any case a drop in the bucket when compared to the hordes seeking to become American citizens. And then there's the research. He summarises - and these constitute some useful links for those interested in this topic:
- A 2006 study in the journal International Tax and Public Finance found that taxes played no role in internal migration flows in Canada.
- Also in 2006, a study in the Cambridge Journal of Economics found no evidence that taxes affected migration within Switzerland despite a wide dispersion in local tax burdens.
- An April 2011 study by the Political Economy Research Institute at the University of Massachusetts found that taxes play almost no role in a person’s decision to move from a state, although it will influence her or his decision of where to live once the decision to move has been made.
- A June 2011 study in The National Tax Journal found little evidence that a sharp increase in New Jersey’s top income tax rate in 2004 had any impact on the migration patterns of those affected by it.
- A new study by the University of Chicago economist Tino Sanandaji examined the international movement of billionaires from 1996 to 2010. He found that 87 percent stay in the country in which they were born; only a third of those who moved appear to have done so for tax reasons.
Don't expect the evidence to keep the lobbyists quiet, though.