Paul Caron has more about the increased propensity of rich Americans to move abroad to avoid high taxes:
Financial Times, Americans Forfeit Citizenship to Avoid Tax:
The number of wealthy Americans living in the UK who are renouncing their US citizenship is rising rapidly as more expatriates seek to escape paying tax to the US on their worldwide income and gains and shed their “non-dom” status, accountants say.
As many as 743 American expatriates made the irreversible decision to discard their passports last year, according to the US government – three times as many as in 2008.
The trend was particularly noticeable in the UK, where 190,000 Americans live and work. There is a waiting list at the embassy in London for people looking to give up citizenship, with the earliest appointments in February, lawyers and accountants say.
What do you think? Is it a good idea to force Americans who create jobs, generate wealth and consume great amounts of goods and services to leave the country and encourage those who do not create jobs, do not generate wealth (or worse, live off the wealth of others) and who consume few goods and services to stay in the country?
A no brainer, right? Well, that’s just the kind of absurd nonsense class warfarism gets you.
The world has gotten smaller and people have become more mobile. The rich will leave if they can save money by doing so.
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2 responses so far ↓
1 Mary O'Keeffe // Jul 19, 2010 at 10:10 pm
Peter, it’s not obvious to me that people are giving up their US citizenship to escape the tax burden.
After all, the article notes that the phenomenon is especially prominent in the UK, where taxes are considerably higher than they are here. The top income rate of 50% applies to income over 150,000 pounds (equivalent to roughly $230,000 in current dollars) and they have a VAT as well, currently at 17% but set to rise to 20% in January 2011.
Of course, there are some countries where the rich pay very little in taxes–check out this story on Pakistan, for example, but it doesn’t sound like a very politically or economically stable or attractive place to put down roots–
http://video.nytimes.com/video/2010/07/18/world/asia/1247468421481/tax-free-living-in-pakistan.html?scp=3&sq=pakistan%20tax&st=cse
In fact, the US tax burden is quite a bit lower than most of the other OECD countries. See this study:
http://www.taxpolicycenter.org/publications/url.cfm?ID=1000976
2 Peter // Jul 20, 2010 at 8:00 am
Mary,
Good point.
Already Michael Caine and Andrew Lloyd Weber have said they are considering moving to the U.S. if the top U.K. rate goes overs 50%. My point, of course, is not diminshed by the fact that citizens of other countries are more inclined to escape high taxation than are citizens of America.
Taxes, like all other high ticket costs, are a consideration in determining where one chooses to live and work.
I believe that the more high-income earners and job creators we have in America the better for our economy. We should give these folks tax incentives to moveto America rather than give the high-income earners and job creators we already have here a reason to flee.
Your attempt to connect Pakistan’s political, ethnic and religious turmoil with low taxes is so great a logical leap that a sort of grandeur creeps into it. It’s like a mother who asks her disobedient seven year old child, “why can’t you be more like the neighbor’s dog.”
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