Missing In Action: All Those Millionaires Supposedly Fleeing Higher Taxes

It remains a potent threat: raise taxes on the wealthy and they will board their private conveyances for palmier climes, taking their money and their jobs and their innovations and their capitalistic spirit. Leaving you to wallow in self-righteous poverty.

Or so we are told.

But the reality is apparently a lot less interesting.

The data suggest that when faced with sizable tax increases, the wealthy, in reality...adapt. Even in France, the latest and most radical emblem of socialism in action, having elected an actual socialist, the rich have apparently decided that for all of its aggravations, Paris is preferable to Belgium or Switzerland or Russia. There are occasional examples to the contrary, but as the following article explains, few real millionaires have given up their French citizenship. In fact, even in the US, few New Yorkers or Bostonians seem tempted, let alone swayed, by the less fiscally demanding lifestyles available in neighboring states.

Taxes may be the price of civilization, as Supreme Court Justice Oliver Wendell Holmes once intoned, and that continues to outdraw the alternative. JL

The Economist's View reports:

In a population of 65 million we have one confirmed departure, one effort to leave... We see kind of story this again and again: hyperventilating threats from a country's wealthiest citizens that they will depart in droves if they have to pay higher taxes - yet when their bluff is called they fail to act - but still keep on grousing and issuing the threats.

Financial Times finds evidence of huge flight of rich after French tax hikes: . . . or at least that's what seems to be suggested in an article entitled "Top executives join France exodus." ...

"Exodus" is a pretty big word. Now let's see. What does the article actually say?

"Two senior executives at Moët Hennessy, the champagne and cognac arm of the LVMH luxury group, are moving to London from Paris."

That's your exodus, right there. But it does, admittedly, come with a qualification, a bit lower down in the article: LVMH told the Financial Times that their moves were "not because of tax reasons." ...

It's tiresome. ...

So much for the rhetoric. What does the evidence from the real world tell us about the migration patterns of the wealthy, in response to tax rates?

One of the best testing grounds for the 'tax migration' theory is among individual states in the United States, which each levy variable state taxes ... and where cross-state migration is far easier than moving, say, to a different country...

And here the evidence is unambiguous. Take this Stanford paper, for instance, which finds 'negligible' effects from a large state tax hike in New Jersey. Or this ITEP paper entitled "Where Have All of Maryland’s Millionaires Gone?... Or this, on New York, or this, on Oregon. (From those links, get a load of that repeated Wall Street Journal hyper-ventilation, in the face of all the evidence). More generally, take a look at Citizens for Tax Justice's Evidence Continues to Mount: State Taxes Don't Cause Rich to Flee...: the evidence is simply incontrovertible. For a more hilarious British example, take a look at this delicious Tax Research skewering of a ridiculous recent story in the Telegraph newspaper, headlined Two-thirds of millionaires disappeared from official statistics to avoid 50p tax rate.

The Telegraph followed this up five days ago with an article headlined Almost a quarter of millionaires want to quit Britain. (Yes, that's how cheap talk is. Let's now watch and look-see if almost a quarter of Britain's millionaires do leave, shall we?)

And where, pray, do these British millionaires want to go? Well, according to ... this story, the top destinations are: Australia, the U.S. and Canada, and . . . yes, France.