Skip to comments.The Millionaire Man Exodus
Posted on 11/29/2012 5:14:39 PM PST by RKBA Democrat
(Full title: The Millionaire Man Exodus: What Obama Can Learn From The UK's "Tax The Rich" Plan)
Regardless if the Fiscal Cliff is resolved tomorrow (impossible), on December 31 (unlikely), or in tandem with the debt ceiling hike some time in March 2013, after all the government fund buffers have been soaked dry as they were back in August 2011 (most likely), one thing is certain: America's wealthiest (billionaires and millionaires) are about to see their taxes soar - that's more or less a given.
The question is what happens then. Will, the wealthiest - those who have access to and can buy banking, incorporation, citizenship and legal services in any global jurisdiction in a world that has never been this decentralized and this , take it all quietly up until that point on the Laffer curve says they will commit mass suicide, or maybe, just maybe, because they don't feel like being force to pay uncle Sam even more than they currently do with the proceeds not used for something constructive like paying down debt, but instead to fund government corruption and inefficiency, they will pick up and leave without saying goodbye or even looking back, and in the process crush future US government tax revenues even more and send the deficit soaring more. After all it is the "1%" who pay 30% of all income tax. This means roughly about $600 billion in tax revenues annually.
"No risk in that", many will say - after all where can they go? Well, apparently many places. Because if the UK, where as the Telegraph reports a stunning two-thirds of domestic millionaires opted to leave the country than pay a "punitive" 50% tax, is any indication it is possible that the imminent tax hike on America's wealthiest is going to be one of the most destructive things that can happen to America's already unsustainable budget deficit.
In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.
This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.
The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.
It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes. ...
Last night, Harriet Baldwin, the Conservative MP who uncovered the latest figures, said: Labours ideological tax hike led to a tax cull of millionaires.
Far from raising funds, it actually cost the UK £7 billion in lost tax revenue.
Labour now needs to admit that their policies resulted in millionaires paying less tax and come clean about whether they would reintroduce this failed policy if they were in power.
Mr Osborne argued earlier this year that the 50p rate was deterring entrepreneurs from coming to Britain.
It appears that at least the UK has learned its lesson:
George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.
Sadly, even with this largely cosmetic move, the UK too is grappling with a far bigger issue: it has never been about revenue. It is all about spending. And both in the UK and the US government spending is simply too big. How big? So big that all tax revenues couldn't fund just the mandatory payments (which exclude military spending), let alone discretionary.
But both the UK and US know that revealing this little factoid would lead to the beginning of the end, as the realization that the welfare state myth, which has perpetuated a tenuous peace in the "developed world" ever since the advent of Otto von Bismark, has been one big lie. And anyway, with some additional money still entering the ponzi system, one does not need to pull the plug on it just yet: it will likely last at least one or two more years before it all comes crashing down.
Yet while the UK learned the hard way that in today's world jumping on one's G-6 timeshare private jet and becoming a citizen of XYZ takes a few hours top of preparation and execution, the US is only now going to learn this very hard lesson.
The only way out of this is forfeiting your US citizenship, which is a mighty big step to take. Not counting cultural and patriotic issues, but only talking finance, an exit also requires that you pay up on any unrealized capital gains as you exit.
It pains me to say this, but the country I grew up in, the land of the free, now has one of the most greedy and grasping tax systems of the civilized world. I've heard that overseas bankers in many countries don't even want your account if you are a US citizen.
“It should be known that at the beginning of a dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments.”
‘Abd-ar-Rah.mân Abû Zayd ibn Khaldûn (1332-1406)
Way before the Laffer curve, we had historical evidence of the consequences of societial decay.
Beat me to it.
I never bother reading articles that begin with the presumption that Obama doesn’t want to destroy the U.S.
I think Eritrea is the only other third-world, socialist sh!t-hole that taxes citizens on their worldwide income.
Not if you get your assets out of the country *before* renouncing your citizenship.Of course such a plan might mean that you'd risk arrest if you ever tried to enter the country again.
They aren’t going to leave, as the British millionaires probably mostly didn’t leave either. All they have to do is fix it so they don’t recognize personal income. Many business owners have the option of declaring dividends or setting the salary they pay themselves out of the business, etc. They will just not declare dividends, pay themselves less, and so forth. There are many other ways.
The higher marginal tax rates go, the more attractive tax shelters are.
Abd-ar-Rah.mân Abû Zayd ibn Khaldûn (1332-1406)
Great quote! Do you have any info about the original work that came from? I did a couple web searches, and see the quote verbatim, but not the source.
Looks like the quote is from this:
In 1990, when Congress imposed a luxury tax on yachts, private airplanes and expensive automobiles, Sen. Ted Kennedy and then-Senate Majority Leader George Mitchell crowed publicly about how the rich would finally be paying their fair share of taxes. But yacht retailers reported a 77 percent drop in sales, and boat builders laid off an estimated 25,000 workers.
What happened? Kennedy and Mitchell simply assumed that the rich would behave the same way after the imposition of the luxury tax as they did before and the only difference would be more money in the government’s coffers. They had a zero-elasticity vision of the world, namely that people do not respond to price changes. People always respond, and the only debatable issue is how much and over what period.
Nothing new. In the 1970s Bjorn Borg, young Swedish tennis phenom moved his taxable residence from high tax Sweden to low tax Monaco.
They are called “tax exiles.”
Article showing Europe has learned.
Why it is Republicans aren't using that as a couter-position is beyond me.
There are charities...and there are causes. From a tax standpoint, they should not be treated the same.
The Muqaddimah, An Introduction to History, Franz Rosenthal translation, abridged and edited by N.J. Dawood, Bollingen Series, Princeton University Press, 1967, p.230, quoted by Ronald Reagan. ....
“The great Arab historian Ibn Khaldûn clearly anticipated the Laffer Curve. While most of his political enemies regarded Ronald Reagan as an ignorant fool, Reagan actually majored in economics in college and long remembered Ibn Khaldûn’s wisdom. Supply Side economics was nothing new to him.”
I'm talking Rockefeller, Per, Jones, Packard, Hewlett, MacArthur... These leftist foundations are not charities; they GIVE to "charities", usually with an indirect for-profit motive for the stocks they hold. Sometimes they launder the money first, through an intermediary like Tides Foundation. In any event, there are expense rules these people abuse in which they hide much of their day-to-day expenses, from food to travel. A whole bunch of these people belong in jail. It has to stop.
Amen! Idiot politicians and liberals just assume that taxation doesn’t change behavior, which is absurd. If you tax something, there will be less of it. People don’t stand still to be sheered like sheep. I know of several people who are planning to retire if taxes go higher. Why work to have what you earn taken from you?
Yes, but it wasn't an Ivy League college, so it doesn't count.