Behavioral Responses to State Income Taxation of High Earners: Evidence from California / Joshua Rauh, Ryan J. Shyu.

Format:

Book

Author/Creator:

Rauh, Joshua.

Contributor:

National Bureau of Economic Research.

Shyu, Ryan J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26349.

NBER working paper series no. w26349

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Behavioral Responses to State Income Taxation of High Earners

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

Using administrative income tax data, we analyze the response to Proposition 30, a 2012 ballot measure that increased California marginal tax rates by up to 3 percentage points for high-income households. Relative to baseline rates of departure for their income levels, an additional 0.8% of the residential tax base that landed in the top bracket left California in 2013. Using matched out-of-state taxpayers as controls reveals an income elasticity with respect to the marginal net-of-tax rate of 2.5-3.2 for high-earners who stayed. These responses together eroded 45.2% of state windfall tax revenues within the first year and 60.9% within two years, with the extensive margin accounting for 9.5% of this total.

Notes:

Print version record

October 2019.