When mobility is global for people and capital, local policy may matter more. Under a strong version of the Tiebout hypothesis, households sort among jurisdictions according to their preferred mix of tax obligations and public benefits. Capital may operate similarly, as stocks flow to seek the highest rates of after-tax return. And when wealthy individuals are subject to tax on their capital, both may migrate in response.

In the Wall Street Journal, Richard B. McKenzie (UC Irvine, Merage Sch. Bus.) invokes a neoclassical approach to critique “heavier taxes on the superrich,” whose “quicksilver capital” may simply flow to other jurisdictions in response. Whether this stylized model describes actual behavior, however, remains an empirical question, and recent developments in places as different as California and China complicate any linear mobility narrative. More below the fold.

McKenzie’s position has some appeal, sounding in familiar concerns about international tax competition that have figured into policy conversations since at least the late 1990s. Capital mobility fosters the mobility of its owners, and taxes based on residence may prove particularly susceptible to tax-base erosion through emigration. This argument follows from the title of McKenzie’s opinion article, It’s Hard to Tax Things That Move, Wall St. J. (Aug. 19, 2026):

Governments’ basic competitive problem is that they are landlocked and are competitors for capital that is footloose on a global scale. Their dilemma? Higher taxation of wealth easily transmutes into lower total revenue and economic decline. No wonder so many governments have yielded to the threat and now bid for capital projects with tax concessions and other benefits to attract and hold on to capital.

As I’ve posted previously, the more interesting question is which taxpayers sit at the margin—and which forms of capital make relocation economically feasible. Giving empirical texture to this mobility model requires understanding who these people are, their economic and social position, and their reasons for moving or staying put. What’s yielding this texture in today’s environment?

First, California’s Billionaire Tax appears to be producing at least as much voice as exit. In the Financial Times, Michael Taffe reports that “billionaires have poured nearly $40mn in fresh money into the campaign against [Proposition 40].” Notably, Google co-founder Sergey Brin “moved to Nevada in late 2025 ahead of the January 1 residency cut-off” for the one-time wealth tax’s applicability, but recently contributed “an additional $20mn” to an opposition group, “pushing his total contribution to the group over $100mn.” This political spending emphasizes the durable value of geography in an age of mobility, even as the spenders prepare to make their departures from the state permanent.

Second, Sarah Randazzo at Reuters reports (reprinted in the Japan Times) that, in late July, China implemented “a 20% income tax on offshore trusts” and increased tax enforcement on “returns from offshore insurance policies.” These and other offshore vehicles may shelter as much as $1.2 trillion in assets held by China’s super-rich, and the new rules address human mobility through a departure charge and a functional approach to Chinese tax residence. And the repricing and policing of mobility has generated substantial anxiety among the objects of these new rules:

“There’s no running away from this [new tax]; no way to restructure,” said Singapore-based Ryan Lin, a lawyer who advises high-net-worth clients. “The only way is to not declare and unwind the trust.” . . .

“The enforcement campaign is unprecedented and appears here to stay,” said Christopher Beddor, deputy China research director at Gavekal Dragonomics . . . .

“It’s easy to imagine how this could merge into other goals, such as tougher enforcement of capital controls.”

Overall, neoclassical mobility arguments remain important as a framework for understanding dynamic movements of people and capital—and states’ efforts to retain control over the tax bases linked to them. California’s fight over the proposed Billionaire Tax is generating high-volume political spending rather than a clean exodus, while China’s efforts to reach offshore assets show that capital mobility alone does not remove wealth from governments’ reach. Geography, social ties, and non-tax legal regimes all matter when considering whether new taxes will induce factor flight.

Related TaxProf Blog coverage:

• Fraser: An Annotated California Billionaire Tax Act (July 25, 2026)
• Rauh & Jaros: It Failed in France. It Would Be a Disaster in California (July 8, 2026)
• Newsom Floats Federal Wealth Tax After California Deal Fails (June 29, 2026)
• WSJ: California’s Billionaire Tax Kicks Off a Democratic Civil War (June 26, 2026)
• Clouse et al.: California’s Billionaire Tax Act Threatens Growth and Fails to Address Structural Deficits (June 24, 2026)
• WSJ: Rich Californians Are Finding Creative Ways to Get Ahead of the Billionaire Tax (June 22, 2026)
• Saez and Zucman: The Case for California’s Billionaire Wealth Tax (May 27, 2026)
• California’s Wealth Tax and Billionaire Psychology (Feb. 3, 2026)
• Solana: The Great California Wealth Exodus (Jan. 27, 2026)
• WSJ: Leaving California (Jan. 26, 2026)
• Washington Post: California Will Miss Billionaires When They’re Gone (Jan. 2, 2026)
• WSJ: Threat of California Billionaire Tax Draws Criticism From Ultrawealthy (Jan. 2, 2026)
• The “Mamdani Effect”: Talk, Action, and New York Tax Residency (Dec. 6, 2025)