Do the rich flee from high state taxes?
Subtitle: evidence from federal estate tax returns
By: Jon Bakija, Joel Slemrod.
Contributors: Slemrod, Joel.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10645; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10645.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Inheritance and transfer tax -- United States.; Taxation -- United States -- States.
Description: "This paper examines how changes in state tax policy affect the number of federal estate tax returns filed in each state, utilizing data on federal estate tax return filings by state and wealth class for 18 years between 1965 and 1998.  Controlling for state- and wealth-class specific fixed effects, we find that high state inheritance and estate taxes and sales taxes have statistically significant, but modest, negative impacts on the number of federal estate tax returns filed in a state.  High personal income tax and property tax burdens are also found to have negative effects, but these results are somewhat sensitive to alternative specifications.  This evidence is consistent with the notion that wealthy elderly people change their real (or reported) state of residence to avoid high state taxes, although it could partly reflect other modes of tax avoidance as well.  We discuss the implications for the debate over whether individual states should decouple' their estate taxes from federal law, which would retain the state tax even as the federal credit for such taxes is eliminated.  Our results suggest that migration and other observationally equivalent avoidance activities in response to such a tax would cause revenue losses and deadweight losses, but that these would not be large relative to the revenue raised by the tax"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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