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Comment by flexie | Hacker News Reader

"The exit “tax” seems the most alarming to me. Though it’s called a tax, it’s really just confiscation. And if you look at the other countries in history that have confiscated the property of people who tried to leave, it’s not company you’d want to be in"

- Denmark currently has what is in effect an exit tax on rich people. It's a complicated tax and changed all the time in order to dodge EU requirements on the freedom of movement between EU countries.

PG probably wouldn't want to be in Denmark since after all he exchanged chilly and grey England with warm and sunny California, but Denmark is hardly among the worst places in the world in which to live or do business.

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What is this tax called? As someone who lives in Denmark, it would be nice to know.

In popular terms "havelågebeskatning", formally the tax authorities actually refer to it as the "exitskat" (exit tax):

https://skat.dk/skat.aspx?oid=2176214

It is called “fraflytteraktieavanceskat”. It is a capital gains tax for equities that can be paid at once as if you had sold the shares, or you can delay it by filling out a form every year to the Danish tax authorities after moving abroad.

Capital gains tax is not the same as exit tax though?

Well capital gains tax is pretty much normal, it exists in most places.

As for exit tax in the U.S., i really wonder how one could enforce it. So if you left the country and have another passport (otherwise you couldn't drop U.S. citizenship), what can they possibly do to you? I don't think this absurd leftist idea even deserves much attention or comments, someone just said bs without thinking of it much.

You'd have to self impose exile.

You are required to enter the US on your US passport if you have one.

If you wanted to go back (say to the funeral of a friend, or something equally important) then they could detain you until you paid what they thought was due.

Well a person would not have a U.S. passport if they dropped citizenship right?

When you apply for an ESTA or a US visa you have to tell them about citizenships you hold or have held.

>Though it’s called a tax, it’s really just confiscation.

After all, they earned their money through hard work alone, with no help from the infrastructure, education system and social policies of the country. And now that they have an ungodly pile of it, they should be able to take it to whichever new country will require them to give back the least, and stop contributing to the country that made them rich.

At what point does this logic stop? I see it all the time to justify taxes, but I'm sorry I think there is an upper bound of justifiable tax and a 40% exit tax certainly seems egregious.

>but I'm sorry I think there is an upper bound of justifiable tax

I'm sorry, but I think there's an upper bound on necessary accumulated wealth.

I'm pretty sure you've fallen trap to the pie fallacy mentioned in the interview.

> After all, they earned their money through hard work alone, with no help from the infrastructure, education system and social policies of the country.

This may also be the reason why the number of billionaires per country correlates so strongly with the population numbers: https://en.wikipedia.org/wiki/List_of_countries_by_the_numbe...

Yes, they earned their money legally. And yes, they already paid tax on said money in the country they earned them.

Those are the only two facts that should matter. The rest is just snark.

> And yes, they already paid tax on said money in the country they earned them.

I think the point that exit-tax proponents are attempting to make is that the current social understanding of wealth is that wealth-holders tend to show that they are capable of efficiently allocating resources, so they should be able to continue to do so while they're still in the country, thus we tax them lower than we would if we could more efficiently use those resources. So think of it like a partial taxation or a conditional subsidy alongside a future promise of additional, likely greater, taxation from their future business dealings, job creations, &c.

Since they're leaving, the country is losing out any investment it assumed at an earlier date when deciding to tax less, so the country would effectively just be reclaiming a conditional subsidy.

Funny enough, people leaving a country do not necessarily want to cut out all investments in said country. Just reside (and pay income taxes) elsewhere. Original country could still reap benefits of the existing investments there.

This is one of the reasons exit tax has failed miserably around the world: it prevented good business people doing business in punitive countries in the first place.

> This is one of the reasons exit tax has failed miserably around the world: it prevented good business people doing business in punitive countries in the first place.

You have to define the "good" in "good business people". If you are a global scale entrepreneur planning to start a business and looking for country with an educated workforce that has good infrastructure but you need to be able to take your gathered wealth when the business is mature (read you have an obscene amount of wealth) in order to find cheaper less educated workforce to keep up operations in order to generate more wealth for yourself. Then you are a "good" businessman only in the sense that you are good at maximizing your own pile of gold. Morally you are bankrupt. So what does a "punitive" country loose by not letting you reap the benefits of a "high taxes system" for your own personal gains?

So by your logic an employee who only maximizes his "pile of gold" (salary) and is morally bankrupt and should be punitively taxed?!

What should he do, not sleep at night thinking about "the good of the company" to be a "good employee"?!

"punitively taxed" is your words not mine. And yes a employee who reap benefits from taxes but acts in a way to evade taxes is acting in a morally bad way. However, an employee has very limited ways of evading taxes and pressuring countries to change their taxation system to fit his/her idea of what is "good" whereas people at the top of the pyramid are very "good" at doing this.

> Funny enough, people leaving a country do not necessarily want to cut out all investments in said country. Just reside (and pay income taxes) elsewhere.

That's not what the article is talking about.

They may have paid a smaller total amount of tax on the presumption that the money would be used in the country to stimulate economic activity. If the money leaves then that presumption is gone and there is a shortfall.

Or they may have not. Aren't you presuming too much? What other unwritten presumptions are there that one should be aware of?

Just arguing a position of possibility, not claiming it is currently this way or is absolute fact.

The truth here is that none of us are tax specialists in high government, we're all just speculating from a place of ignorance.

> they earned their money legally

"Legally" is a vague term. What's legal today can become illegal tomorrow and vice versa. What is legal depends entirely on who gets to define and enforce the meaning of the term.

That enforcement can happen in two ways. Either because individuals acknowledge that the state holds a monopoly on violence in return for lawful order through a social contract, or individuals get effectively subjected to violence coming from a stronger individual or group of individuals.

> And yes, they already paid tax on said money in the country they earned them.

You're appealing to a principle of fairness. However, such principle only applies if those who get to define the rules are willing to accept and enforce that principle. Either because there's a large social consensus, or because enlightened despots are in power.

A universal principle of fairness does not exist.

Society at large isn't rational. It's a collective that spawns irrational, often conflicting views and beliefs. And the net result is, in the best of worlds, an uneasy compromise. If the large majority of a community feels that an exit tax is a fair principle, then that's something you will have to accept unless you find a way to convince people of the opposite view.

> "Legally" is a vague term.

"Legal" is not a vague term. What is legal at the time the money was made is pretty clearly established (in the court of law, if necessary).

> That enforcement can happen in two ways.

The enforcement, under the Rule of Law, happens in only one way: through the state. If you don't believe in the Rule of Law, then all this discussion is pointless.

> You're appealing to a principle of fairness.

No, I am appealing to the principle of The Contract. Going back and changing the terms of a contract is illegal. Under the rule of law, of course.

So... Do you feel that the establishment of the Roman Empire was "illegal" as it imposed taxes and Roman rule on previously independent territories? As far as the Romans were concerned, their actions were entirely lawful.

Or how about the American Revolution which was literally a conflict about taxes? As far as the British Crown was concerned, sending an expeditionary force was all about enforcing the rule of law among rebellious subjects. And if the British had won, we would now consider a short-lived Congress just a bunch of irresponsible rebels.

How about the Civil War? Slave owners have balked for a long time over Abolition violating their rights; yet, today nobody in their right mind would consider slavery as something that should to be legalized once again.

What's "legal" or "illegal" has little to do with "The Contract" and everything with who gets to define the rules.

If they're leaving, then the country is losing the sales and inheritance taxes when they go to exercise that capital.

Then maybe "the country" should make it more appealing to stay?!

They are. You lose your money if you leave, so it's more appealing than not to stay.

And why is "the country" in scare quotes.

Staying in a place because you'd be punished if you try to leave is the very definition of a prison.

> And why is "the country" in scare quotes.

Because it's not a "country" asking for this. It's politicians. Who make these kind of proposals for their own, selfish goals. Lately populists have managed to gain more and more support pretending what they propose is for the good of "the country" but in the end it's them who profit the most.

> Because it's not a "country" asking for this. It's politicians.

Politicians are, more or less, democratically elected in the US. A country is just a huge net of social relations, and those social relations express power in electing a representative. A country isn't going to express any preference because it's collectively imagined, and the closest we're currently capable of expressing the preferences of those who are apart of this imagination is through democracy. These politicians don't just pop out of thin air.

Are you seriously arguing that negative incentive structures are invalid?

You also didn't address my point about the missing tax revenue on use of capital.

Just as they are free to psychopathically exploit every tax loophole they can get their hands on, so are countries free to close them.

The exit tax is not closing any tax loophole. Is just a second, punitive, confiscatory tax on money already taxed.

Every tax dodger, every tax evader claims they have paid tax. Every single one. Is that what this is?

I don't pay income tax with my offshore family trust structure but it's legal and I pay sales tax when I spend - those are the only facts that matter the rest is unseemly.

My company doesn't pay tax but it's legal and I pay my employees and /they/ pay income tax - those are the only facts that matter and the rest is just snark.

Leave it out. Leave it right out. All the way out. Then and only then can it be discussed what constitutes good tax policy and what is trying to be achieved with that policy.

Billionaires whining about paying a legal tax that once paid leaves them with more money than they can possibly spend in their lifetimes and those of their children makes me want to spit on my hands, hoist the black flag and begin... - and /I/ tend toward libertarian.

If they dodged taxes, lock them up. Aren't you living under the Rule of Law?!

I think you have a very one- sided and naive point of view. White-collar crimes, especially tax evasion a notoriously difficult to prove area.

I didn't think of that. So if it's so difficult to prove and we'll all be paying the tax anyway, then logically we should all practice tax evasion, right?!

Tax dodging is entirely legal. Eg spend on business consumable this year as a tax expense to lower taxable income and avoid some tax this year. Tax evasion is the same sort of thing, but not legal which is why I mentioned both. Which are legal and which are not is entirely unclear, the wealthy and large co.s employ lawyers and accountants to run cases tying up the legal system at vast expense when caught. Sometimes they're not guilty (at least of the charges brought) too. If you bring a lawyer they'll bring 50. Then hire yours. You've seen this, it's uncontraversial that it happens and it's entirely legal. Moral? Desirable? That's up to you.

It's difficult to fight tax evasion but rather important unless you want to give up on a system of taxation altogether, which has issues.

When you look at an entity with a large income and very little tax paid you know it's one or both of tax evasion and tax avoidance. Apple. Evasion or avoidance? Which is a fancy way of asking "Is what they're doing actually legal? I can't do that, why can they?" Trump doesn't pay tax because he inherited a billion dollars and thinks he's smart. I know a lot of people who really are /very/ smart, who didn't inherit a billion dollars who pay their tax. They can't decide not to like Trump did.

Rule of law. Equality before the law. Sure. Precisely. So what should the law be? What should the tax system be designed to achieve? What are the consequences of each particular trade-off you consider? Is there some new and better way worth considering or is it just hype to disaster?

And now we're at the starting point of a sensible discussion about tax policy.

> they already paid tax

When do you consider someone paid enough tax?

When the IRS says so. Or when do YOU consider someone paid enough tax?

The IRS mostly follows the law. Proposals to change the law to raise taxes or close loopholes exceed the "IRS said so" criteria.

If IRS can't say when you paid enough tax, who can then?

Shall we ask all politicians just in case they gain power and implement their own vision of taxation someday? Or is it safer to just give all earned money to the state just so we can sleep at night?

>Yes, they earned their money legally.

And if Warren or Sanders are elected, they are going to take some of that money...legally.

>they already paid tax on said money in the country they earned them.

From what I gather, "the country" doesn't believe it's enough.

Sure. You can only do that once, though. Others have tried that throughout history, with the same previsible result: see Venezuela and other socialist "utopias".

Venezuela was brought down by rampant corruption more then anything else. Socialism has nothing to do with it at all.

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