Relocation of the rich: Migration in response to top tax rate changes from spanish reforms

A Spanish reform granted regions the authority to set income tax rates, resulting in substantial tax differentials. Using administrative data, conditional on moving, taxes have a significant effect on location choice. A one percent increase in the net-of-tax rate for a region relative to others increases the probability of moving to that region by 1.7 percentage points. We estimate an elasticity of the number of top taxpayers with respect to net-of-tax rates of 0.85. The mechanical increase in tax revenue due to higher tax rates is larger than the loss in tax revenue from the net out-flow of migration