Originally posted by: Fern
Originally posted by: SammyJr
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Nonsense. The rich aren't going to leave. They didn't leave when the top rate was 90% after WWII. They're not going to leave now. All things are not equal. The only places with similar quality of life to the U.S. have equal or higher tax rates.
Bill Gates isn't going to move Microsoft anywhere either. Moving Microsoft facilities would cost a tremendous amount of money. He'd lose a lot of access to the U.S. business and Government market. Microsoft will ship some development work abroad and they'd do that regardless of our tax rates.
And make sure you read up on marginal tax rates. The country is full of people who don't get it.
I don't know how you're so sure the rich didn't leave when we had high tax rates after WWII?
IIRC, in the 80's when we had lower taxes than Europe many of them relocated here.
I suspect you're laboring under the mistaken impression that when the wealthy 'relocate' for tax purposes they actually stay in the country of 'tax residence'. That's wrong.
I've done country-by-country tax comparison studies for wealthy people. They are looking to find where their country of (tax - income, estate & gift and wealth tax etc) residence will be. But that has nothing to do with where they actually spend their time. They'll still stay their apartments in NYC, Paris, Switzerland etc. I.e. While the point of the study was to choose the best country of residence for tax purposes, it had no real effect on where they actually spent their time or where they stayed.
BTW: If we raised our income tax rate as significantly as the OP suggests our rate w/b the highest in the world. You do know that many wealthy/famous 'live' in Monaco which has NO income tax? (In fact, there are plenty of nice islands that have no income tax rate. Just buy a mansion there and claim it as your tax residence and go about your normal business.)
The other part of the equation not addressed here so far is that we'd like successful/wealthy people from other countries to move here, that sure as heck won't happen with a 75% income tax rate.
Finaly, high rates encourage evasion; there's no doubt about that. Also, capital would leave the US to be deployed in other lower tax juridictions and that's a negative for us. Plus, the wealthy have a great deal of flexibility as to when they recognize income, they'd be able to plan around this rate increase hoping it would eventually come down. A lot less income would be reported if such a rate went into effect. I do think the very high earners could handle a few more percent in their tax rate, but one must be careful of the psycological effects of an income tax above 50%. When factoring in federal, state, local income tax rates and Medicaid/medicare some are already close to 50% now.
Fern