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It’s quite easy for the wealthy to move their domicile and assets between states and even countries. The tricks lawyers, accountants, and estate planners can do

It’s quite easy for the wealthy to move their domicile and assets between states and even countries. The tricks lawyers, accountants, and estate planners can do run circles around tax authorities. They can’t close the loopholes as fast as new tricks are created. The “if we only just seized money from the rich to solve all our problems” theorists are wrong on two major counts. First they expect to be able to seize the money, which as I described above is very unlikely. The second is that once they seize it once, they will be unable to seize it again as the wealthy don’t have any more assets or wise up. The proper way out of the fiscal mess is to reform government and, if needed, increase taxes broadly and sustainably. I am not a Bernie Sanders supporter but he was the only one who straight-up said he would raise taxes on everyone, unlike every other candidate that was promising utopia by taking the money from billionaires. But everyone wants easy answers nowadays, no one wants to sacrifice, if it’s not something for nothing immediately then it’s a non-starter.

ashtonkem 6y ago
While I largely agree, I’d raise some limits about the basic principle that people will move their domicile to avoid taxes. People do move to avoid taxes all the time, but it’s nowhere near as simple as saying that people will quickly move to wherever taxes are the lowest; people will tolerate some level of higher tax if they feel that it’s worth it for whatever reason. At the low income end, that’s been CA for decades. CA is a higher tax state than other places, but they could get away with it because people wanted to live in CA, and were willing to pay for it. It helps that the really desirable areas of CA are a long way away from other states, making leaving the state kind of a pain in the butt. It’ll be interesting to see how Covid changes that around. Even at the higher level, we don’t see a ton of millionaires and billionaires renouncing their citizenship and moving to wherever the taxes are the lowest. Some do, but a lot stay in the US because living in the US is a really nice place to be if you’re rich. They might move to the lower tax states, but that’s as far as they’re willing to go. The issue for SF specifically is a bit like the issue for NYC; it’s relatively small and really close to a bunch of places within commuting distance that have lower tax rates. Compared to leaving even CA, leaving SF specifically is really easy. And FWIW, I think that the tax thing is a bit overblown; I think housing costs are the real problem. I’m leaving CA (Los Angeles) next month for another state, and while I’ll save a bit on taxes, it’s nothing compared to what I’ll save on housing costs. Four months of owning a home will save me enough over my 2bd LA apartment to obliterate any difference in income taxes for the year.
- seibelj 6y ago
  I’m speaking more about actually wealthy people. Having a few million dollars and a W2 doesn’t move the needle. If you are a business owner with paper assets of tens or hundreds of millions (and this level of wealth is 1000x more common than billionaires) you have many other options. For example, transferring assets to an offshore trust. You would think this would be illegal or something but it’s extremely common. You can also invest in a variety of things that use various carve outs in our Byzantine tax system to drastically lower what you pay. The list goes on and on and on - and the rich don’t even do it! Their hired guns do, they just sign the papers. This is why the true way to raise taxes sustainably is on the common people. But everyone wants what taxes provide but even mentioning the hint of raising taxes is suicide, which is why Biden claims he will only do it on incomes above $400k. This won’t raise anything like what the country needs to pay off its debts.
rayiner 6y ago
Even Sanders said he wouldn’t raise taxes under $250,000. Which shows that none of this talk is serious.
sershe 6y ago
I used to be a big fan of Bernie Sanders' ~2015 platform of "raise taxes and do sensible things" until I realized there's only one Bernie Sanders and he's pretty old. First and outside of the scope of this discussion, in search of a base he has aligned with the woke, but the main reason I stopped being a fan is exactly observing money being spent in CA and WA by people that are not quite as bright or honest as Bernie Sanders. I no longer want to pay more taxes, because I am philosophically opposed to giving money to complete morons. Frankly, I'd sooner pay taxes to Bill Gates or Warren Buffett - they are more likely to do something sensible with the money.

ashtonkem 6y ago

While I largely agree, I’d raise some limits about the basic principle that people will move their domicile to avoid taxes. People do move to avoid taxes all the time, but it’s nowhere near as simple as saying that people will quickly move to wherever taxes are the lowest; people will tolerate some level of higher tax if they feel that it’s worth it for whatever reason. At the low income end, that’s been CA for decades. CA is a higher tax state than other places, but they could get away with it because people wanted to live in CA, and were willing to pay for it. It helps that the really desirable areas of CA are a long way away from other states, making leaving the state kind of a pain in the butt. It’ll be interesting to see how Covid changes that around. Even at the higher level, we don’t see a ton of millionaires and billionaires renouncing their citizenship and moving to wherever the taxes are the lowest. Some do, but a lot stay in the US because living in the US is a really nice place to be if you’re rich. They might move to the lower tax states, but that’s as far as they’re willing to go. The issue for SF specifically is a bit like the issue for NYC; it’s relatively small and really close to a bunch of places within commuting distance that have lower tax rates. Compared to leaving even CA, leaving SF specifically is really easy. And FWIW, I think that the tax thing is a bit overblown; I think housing costs are the real problem. I’m leaving CA (Los Angeles) next month for another state, and while I’ll save a bit on taxes, it’s nothing compared to what I’ll save on housing costs. Four months of owning a home will save me enough over my 2bd LA apartment to obliterate any difference in income taxes for the year.

seibelj 6y ago
I’m speaking more about actually wealthy people. Having a few million dollars and a W2 doesn’t move the needle. If you are a business owner with paper assets of tens or hundreds of millions (and this level of wealth is 1000x more common than billionaires) you have many other options. For example, transferring assets to an offshore trust. You would think this would be illegal or something but it’s extremely common. You can also invest in a variety of things that use various carve outs in our Byzantine tax system to drastically lower what you pay. The list goes on and on and on - and the rich don’t even do it! Their hired guns do, they just sign the papers. This is why the true way to raise taxes sustainably is on the common people. But everyone wants what taxes provide but even mentioning the hint of raising taxes is suicide, which is why Biden claims he will only do it on incomes above $400k. This won’t raise anything like what the country needs to pay off its debts.

rayiner 6y ago

Even Sanders said he wouldn’t raise taxes under $250,000. Which shows that none of this talk is serious.

sershe 6y ago

I used to be a big fan of Bernie Sanders' ~2015 platform of "raise taxes and do sensible things" until I realized there's only one Bernie Sanders and he's pretty old. First and outside of the scope of this discussion, in search of a base he has aligned with the woke, but the main reason I stopped being a fan is exactly observing money being spent in CA and WA by people that are not quite as bright or honest as Bernie Sanders. I no longer want to pay more taxes, because I am philosophically opposed to giving money to complete morons. Frankly, I'd sooner pay taxes to Bill Gates or Warren Buffett - they are more likely to do something sensible with the money.