Researcher: tax-driven moves by millionaires are rare; focus on young workers to retain future high earners

Professor Christoal Young told the Ways & Means Committee that large administrative data and IRS analysis show tax-motivated interstate moves by millionaires are uncommon and that policy should focus on retaining younger workers who later become high earners.

Using confidential tax-return data, Young reviewed a New Jersey case that added surtaxes above $500,000 and found the number of millionaires in the state rose because more residents’ incomes grew into the bracket — not because high-earners moved in. The study estimated a net "tax flight" loss roughly equivalent to one millionaire per 2,000, a near-zero effect, and reported the state raised about $1 billion annually from the change.

Looking nationally, Young said the team compiled 12 years of returns covering every filer who earned $1 million or more in any year. He reported millionaires move across state lines at about 2.4% annually; of those movers, roughly 15% (about 0.3% of all millionaires per year) moved to states that provided a net tax advantage, a proportion Young described as small in aggregate though large enough to generate memorable anecdotes.

Young also presented border-county comparisons (for example the Oregon–Washington and Vermont–New Hampshire borders) and said the technical analysis shows no consistent pattern of millionaires concentrating on low-tax sides. He emphasized migration is primarily a "young-person’s game": migration rates are highest for recent college graduates while top-income earners are older (median age about 49–50) and therefore less likely to relocate.

On caveats, Young warned that investment-income-focused tax changes create different incentives. People whose income comes mainly from investments are a smaller subset of millionaires but are more mobile and have more tools to shift where investment income is recognized, which raises greater uncertainty about avoidance and enforcement.

Why it matters: The research implies that taxing top labor income is unlikely to cause large-scale out-migration of wealthy residents, but taxing investment income raises different risks. For Vermont, that suggests policymakers should weigh the tax base carefully and consider pairing any top-rate revenues with investments that make the state more attractive to younger, mobile workers.

Next steps noted by Young and members: request technical testimony from accountants and trust-company representatives to probe enforcement, residency rules and the treatment of investment income in any proposal.