Where do top scientists come from? And what do taxes have to do with it?
I was reading this article recently, which talks about “Where star scientists choose to locate: the impact of US state taxes” It’s a summary of a paper about “the effect of state taxes on the geographical location of top earners.”
It’s a very interesting idea: The problem is that states often lower taxes with the hope of attracting business or talent, but there is very little evidence about whether that actually works. So the authors of that paper decided to find a group of influential people who are somewhat easy to track: people who apply for lots of patents, the so called “star scientists” from the title. So the authors built a huge database, tracking where the top 5% of scientists who applied for the most patents had moved to over the years.
And the authors claim that they found pretty clear evidence that people like to move from high-tax states to low-tax states, so the conclusion is that if you want to attract top scientists, you should lower taxes.
Except, I dug through the data and I found the opposite. Yes, top scientists do move to states that have lower taxes, but high tax states have such a large lead in the number of scientists, that that little bit of migration doesn’t matter. But we’ll have to get to that conclusion one step at a time.