From a new study:
Before 2001, some states had an estate tax and others didn’t, but the tax liability for the ultra-wealthy was independent of their domicile state due to a federal credit. In 2001, the credit was phased out and the estate tax liability for the ultra-wealthy suddenly became highly dependent on domicile state. We find the number of Forbes 400 individuals in estate tax states fell by 35% after 2001 compared to non-estate tax states. We also find that billionaire[s’] sensitivity to the estate tax increases significantly with age. Overall, billionaires’ geographical location appears to be highly sensitive to state estate taxes.
Of course, this doesn’t imply that killing the estate tax “pays for itself.” To the contrary, in the vast majority of states, these taxes manage to hit enough dead billionaires to offset the loss of income-tax revenue from the out-migration they cause. But the study serves as another warning that in a highly mobile, globalized world, high taxes can have all sorts of unintended consequences.