“Behavioral Responses to State Income Taxation of High Earners: Evidence from California”, 2024-02-01 (; similar):
Using administrative data, we analyze the response to Proposition 30, a 2012 measure that increased California marginal tax rates by up to 3 percentage points for high-income households.
Relative to baseline departure rates, an additional 0.8% of the residential tax base that landed in the top bracket left California in 2013. Using matched out-of-state taxpayers as controls reveals an income elasticity with respect to the marginal net-of-tax rate of 2.5–3.2 for high earners who stayed.
These responses eroded 45.2% of state windfall tax revenues within the first year and 60.9% within 2 years, driven largely by the intensive margin.