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When Taxes Go Up, Rich People Leave

The right-wing conservatives have many fantasies. Muslims will embrace democracy if you invade their countries. Forever monogamy works, as long as you find the right girl. Voting for Republicans will make goverment smaller. People will use less marijuana if you make it illegal, and so on.

However, one of the biggest left-wing fantasies is that if you raise taxes on rich people, they’ll just say “yes master” and hand it right over. In the real world, this doesn’t happen.

Rich people like their money. The vast majority of rich people worked very, very hard for their money. If you dramatically raise taxes on them, they’ll make sure they won’t pay it. They do this in three ways.

First, they’ll find loopholes in the tax law so they won’t have to pay your new taxes. Most tax laws passed by Western governments always have loopholes like this, because politicians are A) stupid, B) don’t understand economics and/or C) owned by the very rich people they’re taxing.

Rich people have armies of tax attorneys and accountants that normal people like you and me don’t have access to. They use these resources to circumvent many, if not most, new tax laws.

If that doesn’t work, they take the second option and move their money offshore where it’s not taxed (or taxed much less). I’m not even rich, and I’ve done this myself. I don’t feel bad about doing this one bit. I work seven days a week to earn my money, have worked many 70, 80, 90, even 100 hour weeks over my business career to earn my income. I have no interest in giving it to some Bush-Obamism politician so he can waste 40% of it and spend the other 60% on things like giving it to people who don’t want to work or bombing brown people in some distant land who have never attacked me.

(I will be talking more about how to do this in upcoming installments of my Move Out of the Country series at this blog.)

If that still doesn’t work, rich people take the third option and just move away to somewhere where they won’t get taxed as much. This happens constantly. Recently, the entire government of New Jersey went into panic mode because one billionaire got tired of paying all the New Jersey taxes and moved to zero-tax Florida.

“We may be facing an unusual degree of income-tax forecast risk,” Frank Haines, budget and finance officer with the Office of Legislative Services told a Senate committee Tuesday in Trenton.

New Jersey relies on personal income taxes for about 40 percent of its revenue, and less than 1 percent of taxpayers contribute about a third of those collections, according to the legislative services office. A one percent forecasting error in the income-tax estimate can mean a $140 million gap, Haines said.

Left-wingers always forget that they are hugely reliant on those rich people they hate to pay for all of their bullshit government programs. As you can see above, less than one percent of taxpayers in New Jersey contribute a third of the income tax that government needs to spend on their inefficient, bureaucratic, unfair welfare state programs. So one billionaire moves away, and government politicians start getting very nervous.

New Jersey residents bear the country’s third-highest tax burden, according to the Tax Foundation in Washington. Along with the nation’s highest property taxes, it’s one of two states that levy both an estate tax on the deceased and an inheritance tax on their heirs. The income-tax rate for top earners is 8.97 percent.

Yep. That’s why rich folks are leaving New Jersey. I would too, and again, I’m not even “rich.”

Left-wingers read this stuff all the time and yet it never sinks in. They continue to think that guys like Bernie Sanders can jack up taxes on rich people, and the rich people will just happily hand the money over.

Nope. They’ll just leave. Or at least their money and/or businesses will leave.

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17 Comments

  1. roberto

    I thoroughly enjoy your moving out of the country series, and am very Interested to see the next post regarding how to move money overseas so as to lower taxes paid.

    I am looking to move to Thailand in 3 months or so to lower my living expenses.

    I can have a three bedroom house all to myself for half the price of having to share a small 2 bedroom apartment with a room-mate in my current country, even with the cost of plane tickets, and visas.

    Thanks for turning me on to this Caleb!

  2. Caleb Jones

    Oh yeah, you can live like a king in Thailand. It’s awesome cheap over there. I know a lot of people who have retired over there too, normal middle class Westerners who have things over there like a full-time maid, etc.

  3. A Man

    Your posts are hilarious. Here is another left wing fantasy. If we just make laws against owning guns, all gun crime will magically disappear! Nope. Doesn’t work like that.

    Or hey, why don’t we raise the minimum wage. To hell with $15 / hour. Why don’t we just go ahead and make it $100 / hour. Then every body will have enough money to live well on. Sure.

    I live in a high tax state and community because of my job. I am not rich by any means. But I will certainly be moving out to someplace lower tax when I retire in a few years. I believe that “white flight” from the inner cities is not caused by whites fleeing the encroaching minorities at all. White flight is an attempt to escape the cesspools of taxation that big cities always turn out to be.

  4. Caleb Jones

    To hell with $15 / hour. Why don’t we just go ahead and make it $100 / hour

    That is exactly what I tell left-wingers (though I usually use $50 per hour). It’s great, because then you get to watch them make the argument that having wage controls is a bad idea. It’s delicious.

    I believe that “white flight” from the inner cities is not caused by whites fleeing the encroaching minorities at all. White flight is an attempt to escape the cesspools of taxation that big cities always turn out to be.

    YES. I agree with you. This is NEVER addressed; it’s always a “racial” thing. No, it’s a tax thing.

    We work hard. Stop raping us with the highest taxes in the world (literally). Why is that so complicated?

  5. Alejandro

    “To hell with $15 / hour. Why don’t we just go ahead and make it $100 / hour”

    I am not for minimum wage but I never understood why is this supposed to be such a clever response. 50 or 100 would bankrupt most businesses, 15 would not. Is not like the minimum wage is a number chosen at random it is based on statistics and economic studies (whether they are well done is another thing)

    Again, I am not saying minimum way helps the economy but I think “oh well why don’t you make it a million dollars then” is the best response. There are plenty of countries with minimum wage laws that are doing just fine economically.

  6. Zander

    Yeah leftist all know that $50 an hour won’t work. You should argue based on ethical grounds. $15 minimum wage is making it illegal for anyone who cannot produce $15 of value to work. It is going to disproportional harm minorities and women which left claim they care about.

  7. Caleb Jones

    Yeah the tragedy is that leftists, particularly young ones like Alejandro, think that a $50 an hour minimum wage would damage employers but a $15 would be just fine and not hurt anyone. It would hurt millions of people and thousands of employers if that became the law of the land in any major Western country.

    Leftists think they have this godlike power to magically know the exact number that employers in an economy could handle. What’s even more frustrating is that the $15 an hour figure they’re using in Los Angeles was just an emotional number pulled out of someone’s ass.

    The concept that these people actually want to put people in jail for working for $14 an hour is simply astounding. And they think they’re the compassionate ones.

  8. A Man

    It’s funny how Alejandro can see the folly of $50 or $100 / hour artificial minimum wage, but cannot figure out how artificially making $15 the minimum is the exact same economic concept.

    So I will play along. Sure the world doesn’t end when $15 is the law. But what happens is that, now, after a hike, minimum wage workers are not worth the $15 you have to pay them. So instead of hiring a new worker, I install an automated machine to do what the minimum wager was going to do. Those jobs that I would have given to a new trainee instead go to a machine.

    Or, the McDonalds that a franchisee would have opened, simply doesn’t get opened. Before the $15 wage, the owner might have made $200,000/year from his operation. Now with a higher minimum, it doesn’t make economic sense to open that location. Why bother opening a store when you can only make $50,000/year risking your capital. So the store never opens. The jobs don’t get created.

    This is Econ 101.

    Liberals think they can create economic growth and prosperity by creating a law. Hey I know. Let’s spend taxpayer money to hire a person to dig a hole. Then we will hire a 2nd person to fill the hole back in. Fuck Yeah! Government just created 2 shovel ready jobs. But why stop at 2 hole diggers. Let’s get the whole nation in on this. We will pay all of these hole diggers $100 / hour. 100% employment. We will all be rich! Awesome.

  9. Alejandro

    First thing I said is that I am not arguing for minimum wage (much less 15 minimum wage) and you guys totally ignore it, oh well.

    “It would hurt millions of people and thousands of employers if that became the law of the land in any major Western country.”

    Do you consider Germany a major Western country? It has a minimum wage. No it is not 15 but I never said 15 was the right number. For the record, I think 15 is too high.

    “Leftists think they have this godlike power to magically know the exact number that employers in an economy could handle.”

    Is not magic. It is calculated based on real data from a big number of companies. You are just using misleading rhetoric here. Some people looked at the data and concluded the vast majority of companies could handle 15 and it would have a net positive effect on the economy. Again, whether they are right or wrong in the specific number is beyond the point, the point is there is nothing “magic” about it.

    “The concept that these people actually want to put people in jail for working for $14 an hour is simply astounding”

    The person who would go to jail would not be the worker, it would be the employer for trying to exploit someone by paying them less than what society agreed to be a fair minimum wage. But I think you already knew that. You are just using more misleading rhetoric with little substance.

    “So instead of hiring a new worker, I install an automated machine to do what the minimum wager was going to do. ”

    Machines are already replacing people, it has been like that since a long time ago. Companies who can install a machine instead of hiring someone will always do that anyway.

    “Or, the McDonalds that a franchisee would have opened, simply doesn’t get opened. Before the $15 wage, the owner might have made $200,000/year from his operation. ”

    You don’t know that. Since people (including low wage people) now make more money, more people can afford to eat at mcdonalds, so the franchisee gets opened. The idea is that the net economic benefit would be positive because the fact that there are more customers who can buy products makes up for the higher labor cost.

    And again, I am not saying this would be the case for 15. I admit 15 is probably too high. The point is this is not so simple.

  10. Caleb Jones

    Alejandro that was one of the most incorrect comments I’ve ever seen on any of my blogs. I barely know where to begin. You’re thoroughly brainwashed with this stuff so I don’t intend on changing your mind at all, so this response is for the readers who may want to do more research on this:

    I said is that I am not arguing for minimum wage

    Then you need to learn to read your own comments because that’s exactly what you’re doing. Should we abolish minimum wage in all Western countries then? I would.

    Do you consider Germany a major Western country?

    Yes, and Germany would have a far better economy, particularly for the low-income worker, if it had no wage and price controls and didn’t have a monetarist banking system that continually and artificially jacked up prices.

    Is not magic.

    Correct. It’s not magic, it’s arbitrary bullshit. It’s politicians thinking they are master economists which they are not. Even master economists could not determine this number, much less adjust the number every month which would be required.

    It is calculated based on real data from a big number of companies. You are just using misleading rhetoric here. Some people looked at the data and concluded the vast majority of companies could handle 15 and it would have a net positive effect on the economy.

    Exactly. You think that politically biased politicians and their (usually biased) economists think they have a godlike power to know that exact number and whatever number they pick will probably be right. The reason you’re not against the concept of wage controls is that you have a lot of faith in big government to be A) correct and B) impartial and unbiased. Scary.

    The person who would go to jail would not be the worker

    I misspoke on that one but the point stands. You, as a compassionate progressive, are happy to send some hard-working small business owner TO JAIL if he paid an employee *one dollar* under the incorrect, biased, arbitrary minimum wage number set by some asshole politicians who think they’re geniuses. It’s disgusting.

    the employer for trying to exploit someone

    How is paying someone one dollar under the minimum wage exploitative? What if that’s all the small business owner can truly afford? What if the employee is happy to take that pay INSTEAD OF NOT HAVING A JOB AT ALL? Both parties are happy but you don’t like it so you called it “exploit” when it is not.

    by paying them less than what society agreed to be a fair minimum wage

    You’re brainwashed as fuck. “Society” didn’t “agree” to the minimum wage figure! Are you really that delusional? “Society” didn’t take a plebiscite vote to determine that number. A group of elite politicians did. Society nothing to do with it. A few people (not most, but a few) people “voted” for those politicians under a corrupt and inaccurate voting system; that’s still not society. It’s not even close.

    It’s really depressing to see young people equate a group of out-of-touch elite politicians with “society.” They’re the opposite of society.

    Companies who can install a machine instead of hiring someone will always do that anyway.

    You really think that goverment politicians imposing a minimum wage has zero effect on this? There is a significant cost to purchase, install, and maintain these machines. If it costs less to employ humans, companies will do that instead. But if goverment artificially increases this cost…

    Since people (including low wage people) now make more money, more people can afford to eat at mcdonalds, so the franchisee gets opened.

    Not if the restaurant can operate profitably because of a high minimum wage!

    And again, I am not saying this would be the case for 15.

    Correct, your case is that your politicians are godlike and know more about the economy than any other humans on planet Earth with pinpoint accuracy and they can throw out a number and you’ll bow down and assume that number is correct because those assholes are “society.”

    Ugh.

    I hope all of you reading this are paying close attention, and see why I say Europe is fucked. His attitude is the norm over there.

  11. Jack Outside the Box

    “it would be the employer for trying to exploit someone by paying them less than what society agreed to be a fair minimum wage.”

    @Alejandro: Excuse me but, FUCK SOCIETY!

    Since when does blue pill “society” have the right to tell me what I can or cannot do on my own private property, how I can or cannot negotiate with my employees, or what contracts I can or cannot propose or agree to? If I have a business, who does it belong to? Me? Or “society?”

    The former Soviet Union would have been happy to have you as a citizen. Jesus Christ!

  12. epi

    Can we at least get the rich to pay the same taxes as the middle class?

  13. Caleb Jones

    Can we at least get the rich to pay the same taxes as the middle class?

    I wouldn’t be opposed to a flat tax. Better than what we have now.

  14. Mike

    I live in NJ (sigh)…
    We have a fantastic school system, but when my kids are done…see ya.

    Anyway – I would be interested in more on option 2 – off shore money.
    I thought the Feds made this almost impossible recently.
    I heard a lot of countries wont even open an account if youre American due to the high level of information/work required.

  15. Fraser Orr

    @Alejandro
    You have said a couple of times that some great research project was done to determine the minimum wage. Can you tell us more about this project? Who conducted it? What companies were surveyed? How were the picked?

    To the best of my understanding here is what actually happened. For a long time the unions in America have been declining severely. The union movement saw an opportunity to organize low wage workers into a collective union. To facilitate that they arbitrarily determined that these people should get paid twice as much, to make unionization attractive, so they doubled the minimum wage as it stands today, and started in on the whole “$15 and hour”. However the really truth is that this minimum wage hike is far more about getting union representation and collective bargaining for low wage workers than it is about actually increasing the minimum wage.

    @epi
    If the rich paid the same taxes as the middle class the country would collapse due to a lack of revenue. The rich pay the vast majority of taxes in America and all modern countries. The top 10% in America pay nearly three quarters of the tax bill in America, for example (and the bottom 50% pay close to zero.)

    The idea that the rich don’t pay their fair share of taxes is based on an extremely skewed notion of what “fair” means. I am not rich and it utterly disgusts me how much of my income, earned by EXTREMELY hard work, is pilfered by the profligate fools in Washington and Springfield. The only thing worse than the outrageous amount they take is appalling way they waste it. No wait, even worse is the oppressive way they collect it.

    If you travel at all you might have noticed that here in the USA the TSA has a new iPad app that shows a big arrow randomly pointing your to go to the left or right in the airport check in line. This app, that my kids could have written in a morning cost the government $350,000, plus another approximately one million dollars for training materials and miscellaneous.

    It is so easy to waste other people’s money, and even easier to complain about how little they give you to waste.

  16. Caleb Jones

    Anyway – I would be interested in more on option 2 – off shore money.

    Coming right up! Already written the article.

    We’re at the point where the middle class needs to do what historically only rich people did. Get your money out of the West!

    I thought the Feds made this almost impossible recently.

    Nope. As long as you report it, it’s 100% legal.

    I heard a lot of countries wont even open an account if youre American due to the high level of information/work required.

    If you’re talking about a basic checking account, yes, but there are lots of ways around this.

    Stay tuned.