Scaring Away the Geese

Professor Glenn Reynolds gets email from folks who're understandably fed up:

Reader Kartik Gada writes:

For many years (especially the last 130 years), people came to America because the goverments of their home countries did not reward hard work or entrepreneurship. America attracted the best and brightest, and benefitted greatly. We drained the brains out of governments too foolish to nurture the full potential of their best people.

Now if America itself becomes a place that is tough for the best and brightest, not only will new immigrants stop coming here, but many US-born people may leave to find a new country with lower tax rates. People can leave America for much the same reason they came.

What if, say, China sets up a 'special economic zone' that attracts branches of major US corporations, and where US expats are courted, and offered a life of low or even zero income tax, good schools, etc. all while working at the same US corporations, just out of the China division?

[Emphasis mine.]

Think about that possibility: Some Americans would be leaving the US for a country that was entirely communist just three decades ago!

Comments

[Mike T]

The only thing holding a lot of people back is the new exit tax. Since 2006, if you renounce your American citizenship, the federal government can tax all of your wealth as though you sold it with, IIRC, a max rate of 60%. The Republicans put it into effect because they realized that a lot of people might jump ship rather than be taxed into poverty to pay for the various federal entitlement programs.

[Isaac Schrödinger]

60%! Dang!

Perhaps, the frustrated Americans would only temporarily leave and work outside for a few years. This way they won't renounce their citizenship.

I don't know if the government has a way of hitting them hard with taxes in that situation.