A study published in September 2025 in the American Journal of Sociology has examined whether high taxes encourage wealthy Americans to relocate. The research, conducted by Cristobal Young of Cornell University and Ithai Lurie of the United States Treasury Department, analyzed federal tax data of million-dollar earners spanning 2016 to 2023.
Quality of Life and Social Ties Keep Millionaires From Leaving High-Tax States: The Case of the United States
Background
The researchers pursued the study to address a persistent policy debate: can states tax the wealthy without losing them to lower tax jurisdictions? With public services depending heavily on revenue from high earners, policymakers have long worried that increased taxation may drive the affluent to relocate and erode the tax base.
Nevertheless, to explore this question, the authors leveraged two natural incidents. The first was the 2017 Tax Cuts and Jobs Act, which limited state and local tax deductions, thereby exposing more income to state taxation. The second was the coronavirus pandemic, which disrupted community life and weakened social bonds nationwide.
Confidential Internal Revenue Service data enabled researchers to track the movement of individuals with incomes exceeding USD 1 million annually. By comparing residency patterns before and after these key events, the study assessed whether financial incentives or weakened social connections had a stronger influence on relocation decisions.
Key Findings
The study revealed several important findings regarding the behavior of wealthy Americans in relation to taxation and community ties. These findings challenge long-standing assumptions about tax flight and highlight the role of embeddedness in shaping economic and social decisions at the highest levels of income. Take note of the following:
• Pandemic Disruptions: During the COVID-19 period, a temporary spike in relocations occurred. This increase was not tied directly to taxation but to weakened community ties. The loss of embeddedness created new openness to relocation, demonstrating that social disruption can temporarily amplify mobility among the affluent.
• Power of Embeddedness: Strong social, familial, and professional ties were the most influential factors discouraging relocation. The affluent often remain in place not because of favorable tax policies, but because of their local networks, cultural attachments, and personal investments within their communities.
• Low Mobility Overall: Even under circumstances favorable to relocation, the overall migration rate of millionaires remained strikingly low. This finding undermines the widely held belief that the rich are highly mobile in response to taxation and demonstrates a much greater degree of geographic stability than commonly assumed.
Implications
The study concludes that states need not depend exclusively on low taxes to retain and attract wealthy residents. Investments in infrastructure, quality public services, livability, and public places or third spaces are more effective long-term strategies, since these enhance embeddedness and encourage high earners to remain in their communities.
Overall, the research suggests that taxation is a weaker motivator of migration than policymakers often fear. Instead, social embeddedness and quality of life considerations are decisive factors. For states, the challenge is not simply to offer competitive tax rates, but to foster communities where wealthy residents are deeply rooted.
FURTHER READING AND REFERENCE
- Young, C., and Lurie, I. 2025. “Taxing the Rich: How Incentives and Embeddedness Shape Millionaire Tax Flight. American Journal of Sociology.” 131(2): 371-407. DOI: 1086/737165