Like its economy, America’s tax system is heavy up top—especially at the state level, where payments from the super-rich form a substantial share of revenue. When hedge-fund magnate David Tepper announced he was moving from New Jersey to Florida, the state estimated that it could face millions of dollars in lost taxes, putting New Jersey’s revenue base and budget at risk. Indeed, income tax rates vary considerably across states, from zero in places like Florida to nearly nine percent or more in states like New York. [...]
Strikingly, they find that millionaires move at a lower rate (2.4 percent) than the population as a whole (2.9 percent). The chart below, which tracks migration rates from 1999 to 2011, shows how these rates fall as incomes rise. Those making $10,000 a year have the highest migration rates—about 4.5 percent per year. As incomes climb, the migration rate falls steadily, until it reaches its lowest point (2 percent) for those making $90,000 a year. Once incomes reach millionaire-level, the migration rate increases, but only slightly. As the study points out, “higher-income earners show greater residential stability … than do low-income earners.” In other words, the well-off tend to be even more settled than other residents. [...]
That said, those millionaires who do move are more likely to move to a lower-tax state, the study finds. On average, a 10 percent increase in a state’s top tax rate leads to a one percent decline in its millionaires. Still, only around 2 percent of millionaires move due to income taxes, according to the study.
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