Article 04-Leigh.indd

81 National Tax Journal Vol. LXI, No. 1 March 2008 Abstract Do income taxes levied at a state or regional level affect the after–tax distribution of income? Or do workers merely move between regions, causing pre–tax wages to adjust? Using the full income tax parameters for all U.S. states from 1977–2002, I create a “simulated tax redistribution index” that captures the mechanical impact of changes in tax policy on the Gini coeffi cient, but is exogenous to any behavioral response. Analyzing the effect of this redistribution index on inequality, I fi nd that gross wages do not adjust so as to undo the effect of changes in state income taxes. On aggregate, more redistributive state taxes do not substantially affect interstate migration, nor do they reduce per–capita state personal income.