Obama and the Democrats want us to believe that because the top taxpayers just accepted punitive taxes in the 50’s, when the top marginal personal income tax rates were 90% or higher, that today’s most prolific taxpayers will also accept such punitive taxes again. But as the saying goes, “That was then. This is now.”
In the 1950’s, if you were in business and wanted access to the biggest market, then you had no choice. You had to be in the USA. Europe, Russia and Japan were rebuilding from World War II and China was in the throes of adapting to a Communist takeover. South and Central America were still banana republics.
But in 2010, things are much different. Although much of Europe seems to be trying to follow Greece into Socialist collapse, that isn’t true for all of Europe. several countries in Europe are actively seeking our top income earners. Singapore and Malaysia are also attracting big business and big investors. But most amazing is South and Central America. Those former banana republics are now emerging markets, with stable governments and low taxes, to attract investment.
In the 1950’s, the government could get away with soaking the rich, because the USA was the only game in town. But in 2012, if the government continues to impose increasingly punitive taxes on those who already pay the lion’s share of the personal income tax load, then those people will take one of the many other choices available to them. They will take their investment and tax dollars, and the jobs those dollars create, to some country where they will be appreciated for the jobs they create and the abundance of taxes that they pay.
Both Ireland and Panama enacted laws within the last year, specifically aimed at attracting wealthy US investors and skilled US professionals. For some time, Panama has had what is considered one of the best retirement programs in the world. Chile can no longer be considered a third world country. They are in fact, on the verge of being a top-tier country.
Nations that, in the not too distant past were considered unsafe for travel, have become quite stable and are today, building high-end residential and condo developments and filling them with wealthy Americans. Nations that had poor or unreliable phone service a decade ago, have high speed internet today. And let us not forget Skype, for free or cheap international calls. Then of course, there is FedEx and DHL, so wealthy US expats don’t have to worry about shopping options. It just takes an extra day to get the product from a US distributor. Nations that used to depend largely on US aid workers for healthcare, today have top quality healthcare. Panama, for example, has a huge Johns Hopkins Hospital. Nations that had poor or no schools now rank above the USA in math and sciences.
Finally, there are Virtual Private Networks (VPNs), so expats can even securely access data that is supposed to be limited to US persons. When I lived in London, I would download episodes of current television shows that were not scheduled to be shown in Europe for another year, by using a VPN. To the download server, it appeared that my computer was in the USA.
For those who are still having trouble getting a handle on this, think of it this way. Why are you willing to pay $5.00 for $0.50 worth of popcorn at the movie theater? Your choices are limited. Either pay the exorbitant prices, don’t have popcorn or leave and miss the movie. It’s about choices.
In the 1950’s there were no other choices. But it’s a different world today, than it was when the nation’s most successful people paid 90% personal income tax rates. In the 1950’s they took it, because they didn’t have any other choice. But today the choices for our top taxpayers are not only myriad, but enticing.
The effect of trying to “soak the rich” can be best seen in the fact that formal expatriations have increased almost 8 times since Obama took office. If we keep trying to “soak the rich” the only result will be that soon, we won’t have any rich to soak. Of course that means that we also won’t have any jobs to pay those taxes ourselves. But count on it. That won’t stop the government from raising the taxes of those who remain, to make up the difference. In the end, “Soak the Rich” only hurts the poor and middle class.
If Obama is re-elected, more of our top taxpayers will leave, while they still can and that additional tax load will fall on us. Obama MUST be defeated, if this nation is to survive.
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