In Millionaire Migration and the Taxation of the Elite: Evidence from Administrative Data, Stanford sociologist Cristobal Young builds on his substantial research on "millionaire migration," to show that only a small minority of millionaires move when local taxes go up — far too few to represent a net loss to the tax coffers.

Cristobal and his colleagues divide millionaires into "transitory millionaires" (who can readily move to escape taxation) and "embedded elites" (whose commercial and personal lives are too intimately connected to their location to permit them to easily move). By researching 13 years' worth of tax returns from America's richest people, they show that "millionaire tax flight is occurring, but only at the margins of statistical and socioeconomic significance."

Entrepreneurs, for example, tend to cluster

and thrive in their home markets, where they

have deep roots, social ties, and accumulated

local market knowledge (Dahl and Sorenson

2009, 2012; Michelacci and Silva 2007; Sorenson

and Audia 2000). Co-founders and other

allies are often critical to a successful entrepreneurial

enterprise (Ruef, Aldrich, and Carter

2003). Moreover, successful team work is difficult

to accomplish without face-to-face interaction

and co-presence. Despite modern

communications technology, distance is still an

impediment to communication, collaboration,

information-sharing, and trust (Olson and

Olson 2000). When economic success is a joint

product—rather than a purely individual

accomplishment—there is a difficult network

coordination problem for migration: one's own

willingness to migrate for tax purposes must

align with that of co-founders, collaborators,

and perhaps even clients (Young and Lim

2014). Migrating away from these social connections

is costly. "Unlike human capital,

which entrepreneurs carry with them wherever

they go, social capital depreciates as one transports

it from the regions in which it had been

developed" (Dahl and Sorenson 2012:1061).

Millionaire Migration and the Taxation of the Elite: Evidence from Administrative Data [Cristobal Young/American Sociological Review]

Higher taxes don't scare millionaires into fleeing their homes after all

[Ben Steverman/Bloomberg]

(via Naked Capitalism)