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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

Why this paper matters It reframes telework as a public finance shock, not just a labor market shift. 👉 States need to answer the question “where should WFH income be taxed” sooner rather than latter. Policy moved too late on e-commerce even though the solution was clear.

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

The deeper takeaway State & local public finance has always been constrained by geography. Telework amplifies geography! 👉 Current hodgepodge of state rules taxing teleworkers implies: -More tax competition -More arbitrage -More negative costs

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

Big-picture implication Telework decouples where income is earned from where people live. That means: -Tax bases become more mobile -High-tax states lose revenue -Current rules are highly complex so lots of compliance costs 👉 A reallocation of tax revenue across space.

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

Effect of telework on localization of work tests for UI and state corporate tax sourcing rules are also discussed. They often serve a different purpose, but we can learn from them. UI rules usually localize to one state Is that bad for income taxes?

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

Paper discusses the tradeoffs of the policies, but the case for residence based taxation remains very strong. Imagine a world where all states have reciprocity agreements. Legal analysis accompanies it in excellent paper by Kirk Stark www.journals.uchicago.edu/doi/10.1086/...

journals.uchicago.edu

University of Chicago Press Journals: Cookie absent

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

Optimal rule boils down to answering: What is more mobile: the location of job or location of residence? Are most public services consumed at home or by the employer? What are the administrative and compliance costs of each? Are rules neutral with respect to in-person work?

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

Telework creates a fundamental policy problem: Where should labor income be taxed? The paper lays out 3 competing sourcing rules: -Residence-based taxation -Employer-location taxation -Place of work taxation And various combinations of the three.

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

What about jobs? Some states tax based on job location rather than work location. Use data on job postings from Hansen @nickbloom.bsky.social et al Do employers post jobs in low tax states for fully remote workers? No correlation YET.

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

Total tax savings: income + property+ sales taxes are substantial! Highest income teleworkers move to state that save them $12,970 in taxes. But tax savings from migration for non-teleworkers is only $5566 Savings of over 2%!

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

Households with teleworkers also moved to lower property tax states consistent with other evidence showing WFH induces a shift to low house price places. Little movement to low sales tax places.

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

As WFH became common, the revenue losses from teleworkers moving at a higher rate to even lower tax places have amounted to 0.193% of income tax revenue, or over 3.7 billion dollars in the four year period 2020-2023! Can compare to e-commerce losses.

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

We use the @ipums.bsky.social to study migration among teleworkers. Key advantages: -rich set of characteristics that allow us to use @nber.org TAXSIM to construct household level tax savings. -Allows for study of property taxes. Key disadvantage: can’t restrict to continuing employees.

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

To do this we build on the pioneering work of @mertakan.bsky.social @nickbloom.bsky.social et al who were the first to use payroll data to show WFH facilitates migration to low tax states among continuing employees Figure source: siepr.stanford.edu/publications...

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

Even more striking: Empirical fact #2 📊 When teleworkers move, they realize larger reductions in their tax burden than non-teleworkers. They move to different places that households that are constrained to live and work in similar places 👉 Telework amplifies tax competition.

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

Key empirical fact #1 📊 Teleworkers are much more likely to move across states than non-teleworkers. 👉 Interstate migration rates of teleworkers is 1.3 percentage points higher than that of non-teleworkers.

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

The old world: -You live in State A -You work in State A -You pay taxes to State A Clean. Simple. Tax base = location. The new world: -Live in low-tax State B -Work remotely for firm in high-tax State A -Or vice versa 👉 Who gets to tax you?

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

This paper is accessible to policymakers and provides answers to the question of how to tax teleworkers by providing: -clear descriptive empirical evidence -comprehensive policy proposals -clear policy analysis for what to do @taxnotes.com @ncslorg.bsky.social @natlgovsassoc.bsky.social

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David R. Agrawal @davidragrawal.bsky.social · 30/04/2026

🧵Is telework threatening state and local tax systems? My new paper: “State and Local Tax Policy in a Time of Telework” (with Xinyu Chen) @natltax.bsky.social Idea: telework decouples the residence and workplace posing challenges for who taxes remote workers. doi.org/10.1086/740842

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

Agree. City and suburb with commuting is a nice example of that heterogeneity.

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

PS: For the first time, AI helped me write this thread.

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

I hope this article is a good survey for your undergraduate and graduate classes in public finance, both in public policy and economics departments. Article is open access here: onlinelibrary.wiley.com/doi/epdf/10....

onlinelibrary.wiley.com

Lessons on State and Local Income Taxes From the Twenty‐First Century and Challenges for the Future

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

Bottom line: State income taxes are not just about rates. They’re about: ➡️ Geography ➡️ Mobility ➡️ Policy endogeneity And those forces are getting stronger.

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

Big open questions (research agenda): 🔍 effects of sourcing rules on economic outcomes and prices 🔍literature on local income taxes in the US is almost non‐existent 🔍how do people respond with telework 🔍mobility of jobs, employment contracts, rental property income?

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

Key takeaway for policy: You can’t design state income taxes ignoring mobility. ➡️ Optimal policy includes a rule over where income is taxed, which is influenced by elasticities under each rule.

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

Telework implies: More tax base mobility More disputes over sourcing rules ➡️ Geography still matters for tax policy even if it matters less for telework Geography may matter more!

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

Big new challenge: telework 💻 Work and residence are now fully decoupled. ➡️ Where is income earned? Who has the right to tax it? This is going to reshape state income taxation.

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

This leads to strategic interaction across jurisdictions States don’t set taxes in isolation—they respond to each other. ➡️ A network of interdependent policy choices

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

Mobility creates a central tension: Governments want to raise revenue But individuals can move ➡️ Result: Tax competition limits local taxation

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

Sourcing rules influence what / who are mobile as well as the magnitude of the mobility elasticity ➡️residence‐based: individuals move their residence across places ➡️employer‐based: people will change jobs across places They are not the same, especially for local governments!

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

Modern evidence is clear: 📊 Taxes affect BOTH where people live and work 📊Especially for high earners ➡️ But the tax rule (source vs. residence) influences what is mobile: households or jobs? State tax systems have components of both rules!

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

Given this variation across space, where should income be taxed? Key principles: Residence vs. source vs. workplace These rules shape: 📍commuting 📍migration 📍tax avoidance And they matter a lot more than many models assume.

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

…and even across local governments

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

And there is lots of variation across states:

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

The income tax has arguably become the most important tax at the state level passing the sales tax in importance:

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

Core idea that makes subnational governments different: Geography is everything! State & local governments operate within borders—but taxpayers don’t ➡️ Mobility due to tax differentials fundamentally constrains taxation ➡️ Tax policy needs clear rules on where income is taxed

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David R. Agrawal @davidragrawal.bsky.social · 28/04/2026

New paper surveying subnational income taxes: 📄 Lessons on State and Local Income Taxes From the Twenty-First Century and Challenges for the Future onlinelibrary.wiley.com/doi/epdf/10.... What have we learned about subnational income taxes—and what’s next? A short thread 👇

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Reposted by David R. Agrawal

Kevin Spiritus @kevinspiritus.bsky.social · 07/04/2026

Registration is open for the 6th Tinbergen Institute Public Economics Workshop on 20 May at the University of Amsterdam, with @davidragrawal.bsky.social, David Seim, Kate Smith, and Etienne Lehmann. Register: tinbergen.nl/event/2026/0...

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David R. Agrawal @davidragrawal.bsky.social · 25/10/2025

Looking forward to presenting this new paper on the welfare effects of policy competition in the OSUS seminar. Paper: papers.ssrn.com/sol3/papers.... Get the zoom link for the talk here: us06web.zoom.us/webinar/regi...

papers.ssrn.com

Policy Competition in a Spatial Economy

<p>We incorporate policy competition among governments into a quantitative spatial model. Our new approach quantifies the interdependence of policymaking among

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Reposted by David R. Agrawal

Marius Brülhart @mariusbrulhart.bsky.social · 11/10/2025

An early Christmas gift 👇 Thanks, @davidragrawal.bsky.social, Jim Poterba and @omzidar.bsky.social, for leading this project so successfully. It was an honor and a pleasure to contribute a chapter on corporate tax competition among the Swiss cantons.

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David R. Agrawal @davidragrawal.bsky.social · 11/10/2025

Excited to receive our new 536 page book on tax competition and coordination in the mail today: "Policy Responses to Tax Competition" (w/ Poterba & @omzidar.bsky.social) I know everyone is looking forward to order it here: amazon.com/-/es/Respons...

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Reposted by David R. Agrawal

Theoretical Economics @econtheory.bsky.social · 23/07/2025

Theoretical Economics Volume 20, Issue 3 (July 2025) is now online econtheory.org

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David R. Agrawal @davidragrawal.bsky.social · 15/04/2025

Last day to submit! Looking forward to seeing you in Berlin!

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Reposted by David R. Agrawal

Georg Thunecke @georgthunecke.bsky.social · 08/04/2025

🚨 1 week left! 🚨 Working on local public finance or fiscal federalism? Present your research in Berlin 🇩🇪 📅 July 7–8, 2025 📍 Harnack-Haus 🎙️ Keynote: @davidragrawal.bsky.social (UC Irvine) ✈️ Travel & stay covered 📩 Apply by April 15 → events.tax.mpg.de/event/10/ Please share this! ♻️

events.tax.mpg.de

Local Public Finance and Fiscal Federalism Around the World

The aim of this conference is to bring together international scholars of all career stages working on topics of local public finance, fiscal federalism, interjurisdictional competition and cooperatio...

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David R. Agrawal @davidragrawal.bsky.social · 25/03/2025

Local public economics and federalism are important! I'm excited to return to Berlin to give the keynote at this conference on local public finance issues around the world. Travel funding available! Submit your local PF papers here: events.tax.mpg.de/event/10/

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David R. Agrawal @davidragrawal.bsky.social · 20/02/2025

Excited to serve another term as Editor-in-chief of @itaxjournal.bsky.social with this new fantastic team!

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David R. Agrawal @davidragrawal.bsky.social · 20/02/2025

Thanks to both Ron and Nadine for their service to the public finance community, especially during the crazy pandemic years. I learned a lot & enjoyed working with them over the last four years where submissions to the journal almost doubled! And follow @itaxjournal.bsky.social which is new here!

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David R. Agrawal @davidragrawal.bsky.social · 31/01/2025

Elasticities are endogenous and government choices. Eg they can be influenced by sale or things like zoning. We wanted to add this to the model but will save for future work

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