Concerns about the tax-induced exile of a mobile elite are often cited as major constraint in the ability to set progressive tax systems. Yet, evidence is lacking on such mobility responses for top earners overall. We fill this gap by leveraging a large top tax rate reform in the UK and evaluating how much high income individuals respond to tax increases by migrating. We combine a quasi-experimental design and structural methods to precisely identify heterogenous mobility responses and their impact on public finance. We find that natives do not respond to tax changes with a precisely estimated 0 mobility response. Foreigners do respond, and among them, those who arrived recently and have a high baseline mobility overwhelmingly drive the response. This has two important implications. First, it means that a moderate effect on flows will compound into sizeable effects on stocks, because they will compound over a long period of time. Second, it provides a strong case for a temporary impatriate regime, as it can attract and retain individuals at the time when they are the most mobile and responsive. For the reform studied, we find that the pure migration effect reduced the static tax base by 27%, with almost no effect in the short run.

Draft available upon request

The Register of Overseas Entities (ROE) was introduced by the government in Spring 2022 with the commitment that it would “require anonymous foreign owners of UK property to reveal their real identities”. We use data released by Companies House and HM Land Registry to assess to what extent the ROE is currently delivering on this aim. We identify and quantify several major ‘gaps’ in the scope and operation of the register and make recommendations for how the register could be improved.