Does taxing the rich cause millionaires to flee? | Hacker News Reader

Does taxing the rich cause millionaires to flee?

forkingpaths.co

13 pointshermitcrab30 comments

The problem is what the rich do with their money: namely asset purchases. Todays rich don't invest in production only asset accumulation. All those years of ZIRP has just resulted in the rich buying up property, hence the high house prices.

Tax the rent-seeking-asset-accumulation rich. Don't tax the rich that invest in production. And tax the banks heavily for loans for asset buying. Encourage the banks to loan for investment in production.

My best teacher - my freshman HS History teacher - taught us the definition of "capital"... and then proceeded to illustrate his assertion that "The only capital is land, people! Factories can burn down; ships sink; only land stays."

That is why the rich seek out asset purchases, which is partly a proxy for: land.

Which is why, when the rich buy up assets (ie land), its inflationary. They are not adding to the pool of assets (supply), they are consuming them. Sure, I understand, land can be "developed" so that it can become useful (eg draining a swamp, building a high-rise instead of single storey) so in effect that is adding to the supply. But as your History teacher pointed out land is still effectively a fixed supply.

It would be nice if govt policy could help create the conditions such that a return on investments in production where more attractive (ie profitable) than buying up a fixed supply of assets. But instead govt policy did effectively the opposite.

Henry George and his LVT (Land Value Tax) comes to mind.

Gary Stevenson of gary's economics argues that the rich are much less mobile than working people. In owning land, assetts, and businesses it's very difficult for them to leave or for their departure to insulate them from taxation. In short, the Rich are very easy to tax and it's hard to them to evade just by changing primary residence. https://www.youtube.com/shorts/Mcf6dbxUVx0

I'm guessing only if they have some better place to flee to.

I'm reliably informed that Mars is a hellhole.

And just imagine it populated by millionaires!

Imagine having a billionaire with a fragile ego and the emotional development of a 10 year old, deciding whether you get your weekly supply of oxygen.

Wasn't that a big part of the plot of Total Recall?

Yes. In the film the authorities cut off oxygen to people rebelling against their authoritarian rule. Which is very bad. But imagine it happening because you posted something slightly mean on social media.

Exactly. You look at the chart with Central Park and all the districts around it and think, where tf they gonna go instead of that??

UK is seeing anecdotal evidence that yes, it does cause millionaires to flee. Also gives well-earning non-millionaires the final push.

I'd argue it is less about the tax level and more about value for money. UK services are in a downward spiral while the taxes are going up, which I think is the core issue.

Even if you don't rely on, say, public healthcare as a rich person, it does affect you, as it pushes the equilibrium level for your premium service.

>UK is seeing anecdotal evidence

Do you have any actual numbers, or just anecdata? The linked article quotes numbers.

I don't have any numbers I hugely trust, but this report has been doing the rounds: https://www.independent.co.uk/news/uk/home-news/uk-millionai...

Apparently UK is losing twice as many millionaires as China and while, granted, there may be restrictions on leaving, but still, the population is about 20x bigger.

The article seems to be paywalled for me, so sadly I didn't get to their hard evidence bit.

"An estimated 16,500 millionaires are set to leave"

That is not the same as people actually leaving.

Also I am happy for them to&^%$ off and not pay tax somewhere else. Good riddance.

> "anecdotal evidence"

Military intelligence.

Jumbo shrimp.

Compassionate conservatism.

Original copy.

Let's find out!

I suspect a good percentage of the people reading HN fully expect to be millionaires or billionaires one day, so they probably aren't too keen to increase taxes for the super rich.

"Millionaires comprise about 8.8% of the American population." according to https://www.forbes.com/sites/jackkelly/2023/05/23/the-making... and that's the general U.S. population. It's probably an order of magnitude higher for HN.

A million dollars of accumulated wealth was a lot of money, when the term was first coined in the 18th century. Nowadays, not so much.

Anybody with a good pension plan is effectively a millionaire too. Upon retirement you're likely better off with a pension plan that pays a guaranteed $40K/year than with a million dollars in the bank.

Pensions are almost unobtanium in the US.

15 percent of American workers in the private sector have a job with a defined benefit pension. (https://www.bls.gov/opub/ted/2024/15-percent-of-private-indu...). Most workers in the public sector have a defined benefit pension, which almost doubles the number.

25% of workers is a significant percentage.

The problem is what governments mean by "super rich" and what people expect it to mean. They expect it to mean 10 million in assets and up, at minimum.

What governments mean: $30k in "assets" and up. I get it. If you don't do that the tax base is too small, and they just preemptively give up on taxing the actual super-rich.

I'm quite allright with taxing billionnaires, no question. Even when in the millions, by all means, tax away. But please only start increasing tax when we're like 50% above a downpayment for a decent house. And this is not what's happening.

Very well studied; pretty much the decline of california right now; and city of detroit as examples where this happens.

A great example was Sweden who implemented a "financial transaction tax" of ~2% which was insane. Stockholm exchange dropped well over 60%, about 50% of which moved to London UK. Liquidity in stockholm essentially went to 0, which means no more retirees.

A shocking amount of businesses fled sweden and they had to repeal their own tax because it was essentially crippling their entire country. It was so bad that the government was forced to greatly deregulate the financial markets to attract businesses back. In the end they killed their own stock market and it had to be sold to a private entity. 10 years after their idiotic tax did they even start to see recovery.

Better yet, this recovery was mostly dotcom bubble stocks that eventually popped only years later further setting back stockholm. Recovery was probably about 2005? Luckily they were significantly impacted by the financial crisis.

tldr: a 2% tax on millionaires caused so many to flee that even after repealing, 20 years of damage continued.

>tldr: a 2% tax on millionaires caused so many to flee that even after repealing, 20 years of damage continued.

A 2% financial transaction tax is very different a 2% income tax though, isn't it?

>A 2% financial transaction tax is very different a 2% income tax though, isn't it?

The severity of the tax is what makes the story worth telling.

It's important to note as well. When you're talking about "millionaires" it's extremely rare for anyone to be under 40.

The 68 year old retiree is who a millionaire tax hits; but they are specifically the people who are dreaming to move to florida or a tropical island. All of these destinations are actively doing marketing to attract such people to spend their savings in their country.

Florida for example calls it's EB5 visa where you move your money out of sweden and into the usa and you permanently stay in the usa.

>The severity of the tax is what makes the story worth telling.

I wouldn't call an extra 2% tax on income above $1m per year severe.

US taxes have been much higher than they are now:

https://www.wolterskluwer.com/en/expert-insights/whole-ball-...

You will notice that Americas economic decline largely begins when Regan lowered the top rate in 1980, starting the tread that ends up where we are today.

We never get analysis on what returns trickle down economics have given us, but tons and tons of thought and analysis on why we have to keep doing it. You'd think after 40 years there would be some numbers to work with. Instead they sell it with fear 'the rich will leave'. If there is a real economic benefit you would think they would try and sell it with the REAL benefits it has brought us these last 40 years.

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