State implementation of estate tax fails—empirics prove that immigration to non-estate tax locations is inevitable.

**Read this on Aff against the states cp, on federal level, an exit tax may be imposed by the congress to disincentivize immigration for purpose of tax avoidance

We then turn to a triple-difference estimator based on the notion that a billionaire’s sensitivity to the estate tax should increase as they age. In terms of identification, the triple-differenced models allow us to control for the interaction of estate tax state X post-2001. Any correlation between changes in the unobserved determinants of Forbes’ 400 geographical locations and changes in estate status after 2001 is accounted for. We find that the number of old Forbes billionaires in estate tax states drops after 2001 relative to the number of younger Forbes billionaires. The elasticity of location with respect to estate taxes of the old billionaires is significantly higher than the elasticity of the young billionaires.3

As an alternative way to quantify the effect of estate taxes on Forbes billionaires locational choices, we study the probability that individuals who are observed residing in estate tax states before the reform move to a non-estate tax states after the reform; and, inversely, the probability that individuals who are observed living in non-estate tax states before the reform move to an estate tax states afterwards. Among billionaires observed in 2001, we find a high probability of moving from estate tax states to non-estate tax states after 2001 and a low probability moving from non-estate tax states to estate tax states. By year 2010—namely 9 years after the reform—21.4% of individuals who originally were in a estate tax state have moved to a non-estate tax state; while only 1.2% of individuals who originally were in a non-estate tax state have moved to an estate tax state. The difference is significantly more pronounced for individuals 65 or older, consistent with the triple-difference models.

Overall, we conclude that billionaires’ geographical location is highly sensitive to state estate taxes. The 2001 EGTRRA Federal Reform introduced large differences in billionaires’ estate tax burdens among states where there had been none. These ultra-wealthy individuals appear to have responded by leaving states with estate taxes in favor of states without estate taxes. One implication of this tax-induced mobility is a large reduction in the aggregate tax base subject to subnational estate taxation. We estimate that tax-induced mobility resulted in 23.6 fewer Forbes 400 billionaires and $80.7 billion less in Forbes 400 wealth exposed to state estate taxes.

In the final part of the paper, we study the implications of our estimates for state tax policy. States face a trade-off in terms of tax revenues. On the one hand, adoption of an estate tax on billionaires implies a one-time estate tax revenue gain upon the death of a billionaire in the state. On the other hand, our estimates indicate that the adoption of an estate tax lowers the number of billionaires residing in the state. In terms of state tax revenue, the main cost is the foregone income tax revenues over the remaining lifetime of each billionaire who leaves the state due to the estate tax (as well as any potential new billionaires that might have moved to the state in the absence of an estate tax). The cost of foregone income tax revenues is, of course, higher the higher is the state’s top (average) income tax rate. We estimate the revenue costs and benefits for each state of having an estate tax, either just on billionaires or the broader population of all wealthy taxpayers.4