Rich people don't move when their taxes go up

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).