Middle class people are more likely to move because there isn’t job security anymore so if your business moves you to another town or you’re laid off and can only find a job elsewhere, you have to go.
Wealthy people like amenities. They like having roads and bridges that work, regular garbage pickup, potable water, police and fire departments with top-notch equipment and training, functioning governmental offices for the paperwork involved in building another wing on the house, excellent airports, well-maintained parkways and other public spaces, world-class museums and other cultural entities…I could go on, but I think most people here get the drift. Taxes pay for a much nicer (and safer) life experience.
The amenities for rich people don’t change that much of you bump the highest tax bracket from 35% to 65% or if you were to start tax investment income the same as wages. They very well may consider moving if that kind of tax increase happens.
I will say that as a Canadian, lower taxes has figured in the choice of quite a number of talented Canadians to move or set up their businesses in the United States. I suspect this is true for quite a number of entrepreneurs from many different countries. The US has attracted such for many reasons, but a low tax rate is certainly among them.
Even so, I favour Canada’s higher rates, but one needs to know what one is sacrificing. I suspect the finding are correct that currently existing millionaires tend to move somewhat reluctantly, but in choosing a policy decision, it’s important to understand all the costs. In this case, it’s the fact that dynamic young people, who move far more easily, do look at taxes among other attributes when choosing where to set up shop.
I would guess it might make a bigger difference to retired/retiring millionaires/billionaires – if you want to move somewhere with nice weather anyway, and aren’t trying to keep your social circle intact in the same way, you might pick a place with lower taxes.
On the other hand, I bet that is a much bigger effect on the middle class. Billionaries can afford to retire in California or Manhattan if they want to. If you are middle class and retiring and not sure if your nest egg is going to last your lifetime, an extra 10% may be quite a big deal.
Let’s be honest though, Canada has many other disadvantages; in particular, it has a climate that is simply worse than most US locations. Also, very few cities in the world can compete with some of the specialized hubs the US have (LA for media, SF and Boston for tech, NY and Chicago for finance), and none of those realistic competitors is in Canada. A lot of people start businesses in specialized hubs because anywhere else they would be less likely to succeed, regardless of tax rate. You could argue the tax rate is a factor in the birth of such hubs, but tbh it’s one of many (Silicon Valley kickstarted on Defense contracts, Hollywood has the perfect weather for movies, etc etc).
Good point. But those considering moving are already selecting for optimism and self-confidence, so they’re really only looking at how perhaps the top 10% live. At least this was my experience when I had peers moving or considering moving to the US.
I don’t remember anyone actually considering climate - but the tech hub element is absolutely quite important, and for those considering immigration to those hubs, they absolutely outweighed tax rates, which were barely considered (except for the general knowledge that Canadian rates were much higher).
However, for those who weren’t looking at a hub, taxes seemed to play a surprisingly high role in their decision (which mystified me, I didn’t even know what my tax rate was and I still don’t really know - it just comes off automatically). This was from upper-middle class people with decent financial backing. i.e. ones who would likely end up with a decent amount of taxes to pay.
Still, not something I think should affect tax policy in my neck of the woods, but a cost to tax policy that should be understood.
