Realist, not conformist analysis of the latest financial, business and political news

We Know The Rich Don’t Leave. But What Happens When They Do?

There are those who say that if you tax the rich too heavily, they will leave.

And there are those who say that is a myth.

Perhaps Lewis Hamilton doesn’t live in Monaco after all? And maybe Gerard Depardieu still resides in gay Paris?

And maybe Facebook co-founder Eduardo Saverin didn’t throw away his U.S passport to avoid a $400m tax bill?

Examining the populations of tax havens is very instructive – not all the people living in such places, hail from them.

But we have heard the argument that even if rich people do leave, they only leave in small numbers. Of course this overlooks the very concentration of wealth that progressives complain about – that only fifty billionaires scarpered is less important than they took 9% of your tax revenue with them.

Or in the case of the EU, that only a single country has left is not really the point. That the UK is stalking off with £60bn of the EU’s budget is rather more……..le bon mot.

When the rich leave, they leave a big hole.

And we are currently seeing this writ very large indeed, in enormous flashing neon supranational letters, as the departure of one wealthy taxpayer from the EU is causing serious additional burdens on the hard-working wealthy nations that remain.

And as the lazy tax-dodgers poorer nations demand their standards of living not be allowed to fall, so their benefactors become more resentful about the additional burden. 

But as Margaret Thatcher once said, socialists will eventually run out of other people’s money. And the GIPSIs are running out of German money. And the Austrians, Dutch, Danes and Swedes (The Frugals) are making plain they don’t much fancy being on the hook either.

The situation is delectable – a bunch of elitist eurotrash champagne socialists, determined to impose supranational socialism on an increasingly reluctant Europe, are now being given a proxy demonstration within their own pet project of why the high tax rates needed to fund socialism often don’t work.

Angela Merkel in particular has spent the better part of her adult life trying to impose socialism on Europe having seen it fail horribly in her own native East Germany, and is now seeing a further reminder of WHY it always fails.

All very lovely – surely if anyone doubts the existence of a wise and benevolent God, this delightful bunfight should give them pause for thought?

What we are now seeing in the EU is a macroeconomic version of what we see when socialists try to tax the rich to pay for their wet dreams – a small number of rich people decide “bugger this for a game of soldiers”” and depart, leaving the remaining occupants to pay more tax to make up the difference. Because the wet dreams can’t be scaled back, oh no.

The ambitions can never be made to shrink to fit the resources, isn’t that right Monsieur Macron?

Emmanuel and Brigitte confer

On a national scale, that usually means the middle classes. On a supranational scale, it will means the Frugals.

It’s going to be great fun watching them decide whether to pay it.

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John B
John B
4 years ago

Not just the rich. Those of us old enough remember the ‘Brain Drain’ in the 60s & 70s. The rich had mostly cleared out of 83% top rate plus 15% supertax Britain, but then professional and aspirationals realised the harder they worked, the further up the career/job ladder they moved or would move, the further up the tax bands they went with diminishing return on their pay increases. So they left for USA, Canada, Antipodes, South Africa and elsewhere.

It isn’t just those now clobbered by high taxes, it is those who realise they too will get clobbered soon.

4 years ago
Reply to  John B

There will soon be proposals to solve that be restricting passports to the less affluent.

4 years ago

Within the US, there are fewer barriers to changing states, and abundant data that people are fleeing high-tax, high-regulation states, such as Illinois, California, Massachusetts, and New York State for states like Texas and Florida that have no state income tax. Federal rather than state taxes are dominant, and taxpayers used to be able to recoup state tax payments on their federal forms, until Trump put a cap on that in 2017. Laughably, the NY Gov. says the cap is the problem and his own state’s policies are not. President Trump and talk host Rush Limbaugh are notable former New… Read more »

4 years ago

Spot on Austrian MEP Harald Vilimsky warns Brussels is no longer epi-center of decision making but London is, do Not maltreat UK EU federalism Danish MEP urges bosses to get trade deal with UK, “We joined EU to trade with UK” “Danish MEP Peter Kofod told EU bosses that it is essential for his country to continue to trade with its “best trade partner” Britain Mr Kofod criticised the EU for not working towards a common good. He added: “Cooperation based on common good rather than the EU federalism that is sometimes witnessed in this house sadly.” Dutch… Read more »

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