Income Taxes and the Residential Mobility of Top Income Earners: Evidence from US and UK Households in Switzerland
Year: 2025
Type: article
Abstract: We provide quasi-experimental evidence on the income tax-induced residential mobility of foreign high-income households living in Switzerland by exploiting the differential tax treatment of UK and US households. While the two groups are similar in terms of non-tax sorting preferences, US households are effectively insulated from Swiss income taxation due to the US world-wide income tax system. Thus, they provide the control group for the UK households, our treatment group. Comparing the residential choices of the two groups within a 45-minutes commuting zone of Zurich, we robustly find a residential location elasticity with respect to the net-of-tax rate of around eight. This estimate captures the ‘pure’ income tax effect on residential choice, not being downward biased by non-tax location incentives (that positively correlate with income taxes) and by coordination costs between job and residential choices, for instance.
DOI: 10.48620/93079
Authors: Koethenbuerger, Marko, Naguib, Costanza, Stettler, Christian, Stimmelmayr, Michael
Language: English
Topic: Economic and Fiscal Studies
Subfield: Economics and Econometrics
Domain: Social Sciences
SDG: Reduced inequalities
Open Access status: green
OpenAlex ID: W7115080512
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