Arun Advani, University of Warwick

Top Flight: How responsive are top earners to tax rates?

Abstract

Using administrative data on the universe of UK taxpayers, we leverage major top tax rate reforms in the UK and France to evaluate how much top earners respond to tax increases by migrating. We document four main facts. First, looking across foreigners we find a migration semi-elasticity with respect to the net-of-average-tax rate of -0.2, somewhat lower than has been found for specific groups studied previously. Second, migration responses are driven by those with the highest predicted baseline emigration probability, highlighting the importance of accounting for heterogeneity. Third, there is little migration response from natives. Finally, we estimate the long term impact of tax changes on the stock of migrants among UK top earners taking a structural approach, and find that even our modest migration elasticity implies substantial stock changes in the long run.

Arun Advani, University of Warwick, Associate Professor At the University of Warwick and Director of the Centre for the Analysis of Taxation (CenTax). He is also a Research Fellow at the Institute for Fiscal Studies, and have affiliations with the International Inequalities Institute, the CAGE Research Centre, CESifo, and the IZA.

Arun Advani study issues of inequality, tax compliance, and tax design, with a focus on those with high incomes or wealth. he also works on issues of environmental taxation, economic development, migration, and tax in low- and middle-income countries.

In addition he is co-chair of the Discover Economics campaign, aiming to increase the diversity of people who study and work in economics. From 2020-22 (creation to abolition) I was a member of the Department for Education Skills and Productivity Board.

You can read more about Arun Advani here.

CEBI contact: Claus Thustrup Kreiner