The Progressive Tax System is unjust
Many jurisdictions impose high taxes on their most productive members of society while offering minimal taxes to those who contribute the least or nothing. Imagine an accountant, an engineer, or a nurse who has spent years studying and working long hours, only to face tax rates of up to 50%. In contrast, someone who never pursued education, who works a low-paying job, and spends weekends smoking pot or drinking beer pays no taxes and often receives subsidies.
One time, here in Canada, I met a woman whose main purpose in life was to get pregnant as often as possible, so that she could receive child care benefits and social housing.
Here is a woman in the US who have seven kids with seven different men and whose business is to get pregnant to collect government benefits, the benefits that are paid by rich people.
The tax system punishes the most productive member of society and rewards the least productive. In addition, those who contribute the most are often demonized, while those who contribute the least are portrayed as the victims. Just think of how many people hate Elon Musk, Jeff Bezos and Bill Gates. These are people who have taken our society to the level and their reward is that they get vilified for producing goods and services that everyone wants.
The reality is that money is fluid and tends to move to where it is treated best. Many wealthy individuals are growing increasingly frustrated with a system in which they are taxed the most but they are not getting much in return and they are moving to jurisdictions that offer them a better deal.
The Exodus of the Wealthy
More and more affluent individuals are leaving high-tax jurisdictions in search of better opportunities. It’s not that millionaires don’t want to share their wealth; rather, they are disappointed by government mismanagement of their tax revenues and they are looking for places where their tax dollars are better used. For example, California which has the highest income tax of 13.3% and among the highest sales tax of 7.25%, struggles with issues like crime, homelessness, high drug use, a WOKE mentality where kids can change sex at will, and high business regulation. Well, some of its wealthy residents, who are the main contributors to the state’s economy, are getting sick of it, they are packing their bags and moving to where their tax dollars are put to better use.
Here are some examples:
- Elon Musk, CEO of Tesla and SpaceX, moved from California, to Texas, where there is no state income tax. Elon paid 10 billion in taxes.
- Larry Ellison, co-founder of Oracle, relocated from California to Hawaii, where the state income tax is 12%. He’s not getting much of a tax discount but Hawaii offers more value for his money, it has a It often ranks as one of the safer states in terms of violent crime.
- Joe Rogan, the popular podcaster, also moved to Texas, he was attracted by less regulation.
- Tony Robbins moved from California to Florida, which also have zero income taxes. He got upset when California raised retroactively his property taxes
- Kevin O’Leary left New York, where he faced a 10.9% income tax, for Florida, where he enjoys the warm weather and and a richer social life.
European Departures
The trend is not limited to the United States. In Europe, high-tax countries such as France, the United Kingdom, and Sweden are seeing a departure of affluent residents seeking more tax-efficient environments. Switzerland, Portugal, and Monaco are popular destinations for these individuals.
The Appeal of Low-Tax Jurisdictions
People are motivated to protect their wealth or, at the very least, to get good value for their money. Many low-tax jurisdictions also offer attractive lifestyles, such as warm weather and growing economies.
Countries like Portugal and the United Arab Emirates, and many others, offer ‘Golden Visa’ programs, which provide residency and tax benefits to wealthy individuals who invest in their countries.
Addressing Wealth Flight
To address the problem of wealth flight, jurisdictions need to operate more like businesses, they need to compete for tax revenues by offering a compelling value proposition. High taxes can be acceptable if they come with low crime rates, efficient government services, and overall good value for the money. States like California are currently failing to provide sufficient value for taxpayers’ dollars, and that’s why wealthy individuals, who pay the biggest share of taxes, are leaving.
There are plenty of countries who are rolling the red carped to high wealth individuals.
Countries with Low Tax Rates
- Monaco: Zero personal income tax
- The Bahamas: Zero personal income tax
- Dubai (UAE): Zero personal income tax
- Panama: No tax on income earned outside Panama
- Bermuda: Zero personal income tax
Conclusion
If a country or state does not effectively manage taxpayers’ money, individuals will simply pack their bags and move elsewhere. To retain and attract affluent residents, jurisdictions must ensure they provide a good return for their money.
Example of government waste:
Previous opinion posts