Brain drain is a key policy concern for many countries. In this paper we study whether tax incentives are an effective policy to attract high-skilled expatriates back to their home country, exploiting a generous income tax break for Italian returnees. Using administrative data and a Triple Differences design, we find that eligible individuals are 27\% more likely to return to Italy. Additionally, we uncover significant effects throughout the wage distribution, revealing that tax-induced migration is a broad phenomenon beyond top earners. A cost-benefit analysis shows that the tax scheme can pay for itself by targeting young high-skilled individuals.

Top earners contribute to a large share of economic output and fiscal revenue. While there is evidence of migration responses to top tax rates, two important questions remain. First, what the extent of the phenomenon is outside of specific groups and second, how much of a constraint it poses for policy making. We use UK administrative data and leverage two major top tax rate reforms in France and the UK to evaluate how much top earners respond to general tax reforms by migrating. We observe a significant response, but it is concentrated among those who were the most likely to leave in the first place. We turn structural estimation to estimate the long term impact of tax changes on the stock of migrants among UK top earners and find that even modest responses can lead to significant stock changes in the long run.

This study investigates the impact of tax-induced reallocation of innovative activity on local economies. Leveraging US state-level R&D tax credit changes over time, we analyze the reallocation of patents and inventors within firm networks as proxies for shifts in innovative activities. We find a 0.8 percent decrease in successful patent applications at one firm location in response to a 1 percentage point increase in the average R&D tax credit rate establishments within the same firm network experience in other states. The decline in innovative activity also generates spillover effects on surrounding firms. Our results suggest a 0.8 percent decrease in patenting activity of local businesses without a nexus in other states if multi-state firms in their commuting zone are affected by changes in out-of-state R&D tax credits. Our findings highlight the broader implications of tax competition for innovation and overall welfare, offering insights for optimal tax policy design.

We use a novel rich-list data set to estimate the sensitivity of the location choice of super-rich foreigners to a special tax regime, under which wealthy foreigners are taxed on their living expenses, rather than their true income and wealth. We are the first to evaluate this controversial Swiss policy, and show that when some Swiss cantons abolished this practice, their stock of super-rich foreigners dropped by 43% as a consequence. We find no response for the Swiss super-rich, who were unaffected by the policy change.

This paper analyzes a unique micro-dataset capturing the ownership of about 800,000 properties in Dubai. We use this dataset to document patterns in cross-border real estate investments, a blind spot in the analysis of financial globalization. We obtain four main findings. First, offshore real estate in Dubai is large: at least $146 billion in foreign wealth is invested in the Dubai property market. Second, geographical proximity and historic ties are key determinants of foreign investments in Dubai. Third, a number of conflict-ridden countries and autocracies have large holdings in Dubai. This suggests that the official net foreign asset position of a number of low- income economies is significantly under-estimated. Last, we find that the probability to own offshore real estate rises with wealth, including within the very top of the wealth distribution. About 70% of Dubai properties owned by Norwegian taxpayers were not reported for tax purposes in 2019.

The real estate market has been reported to be particularly vulnerable to money laundering schemes as land and house purchases require large sums of money while being subject to fewer regulatory and reporting requirements. This study aims to shed some light on the empirical link between illicit financial flows and real estate rents using unique city-level data in Europe collected through the web portal Numbeo.com. Given the richness of the data, we use a triple interaction term that declares a supposedly more luxurious dwelling as the treated subset among the all dwellings. In addition, we add a set of conditioning variables that characterise cities that are hypothesised to attract higher volumes of illicit financial inflows. Our measure of illicit financial flows is based on the concept of 'abnormal FDI' by Dellate et al. (2022) which largely reflects the volume of unexplained capital channeled through tax havens.

Residency by Investment programs have become integral to contemporary migration policies, providing a pathway for individuals to acquire a new legal status. In this paper, we study the extent to which golden visas impact and distort housing markets. Using the population of transactions records from 2007 to 2019, we analyse the introduction of the Golden Visa program in Portugal. We first present descriptive bunching evidence around the 500,000€ threshold, revealing potential price distortions. Merging the transaction data to property tax records, we conduct a difference-in-differences analysis assessing the program impact on the discrepancy between transaction prices and fiscal values. This analysis uncovers a “Golden Visa Premium,” where transaction prices exceed fiscal values by an average of around 45,000 euros, indicating more than10% price increase in high-end housing prices. Finally, survey data from the Portuguese population highlights widespread support for ending the program.

Taxable transactions may be misreported to evade taxes and hide illicit wealth. Tax authorities must therefore set policy governing both tax rates and enforcement. We develop a model of optimal taxation and enforcement in which policymakers seek both welfare maximization and “tax accuracy,” wherein taxpayers remit the amount that they statutorally owe under truthful reporting; we characterize the optimal combination of tax rate and enforcement stringency in this setting. We apply this framework to the Mumbai real-estate market, a setting with widespread misreporting and a transparent enforcement instrument: government-specified guidance values act as a minimum required tax base.