Affiliation:
1. Stanford Graduate School of Business, Hoover Institution, Stanford Institute of Economic Policy Research, and NBER (email: )
2. (email: )
Abstract
Using administrative data, we analyze the response to Proposition 30, a 2012 measure that increased California marginal tax rates by up to 3 percentage points for high-income households. Relative to baseline departure rates, an additional 0.8 percent 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 eroded 45.2 percent of state windfall tax revenues within the first year and 60.9 percent within 2 years, driven largely by the intensive margin. (JEL D91, H24, H31, H71, H73, J61, R23)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
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