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The effect of a state income tax on migration: the example of Connecticut

Published online by Cambridge University Press:  12 December 2016

Whitney B. Afonso
Whitney B. Afonso*
Affiliation:
School of Government, The University of North Carolina at Chapel Hill, USA E-mail: Afonso@sog.unc.edu
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Abstract

State-level income tax policy is a hotly debated topic in both academic and political spheres. Although economic theory and some empirical analyses suggest that larger income tax burdens affect migration decisions, there is also a good deal of empirical evidence showing that tax policy has little to no effect. This lack of consensus in the academic literature is echoed in the political world, where many states are debating whether to eliminate income taxes or reduce rates as a means of spurring economic growth. Connecticut’s adoption of an income tax policy in 1991 provides a unique opportunity to analyse the impact of a sizable income tax policy change on migration. The results suggest that Connecticut’s income tax deterred movement into the state but had no impact on exit from the state, resulting in a net loss in migration.

Keywords

migrationpersonal income taxspatial error panel modelstate income taxtax policy
Type
Research Article
Information
Journal of Public Policy , Volume 38 , Issue 1 , March 2018 , pp. 113 - 140
Copyright
© Cambridge University Press, 2016 

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