As we approach the end of 2012 we continue to see the scenario that Ayn Rand dramatized in Atlas Shrugged playing out in our world. As predatory politicians penalize and vilify the most productive members of our society (who are, on average, the most prosperous, too), those would-be victims flee.
Starting in France, we see that film legend Gérard Depardieu has taken up residence in a small Belgium town in order to avoid the high taxes imposed by his country’s socialist government. French PM Jean-Marc Ayrault whined that “Those who are seeking exile abroad are not those who are scared of becoming poor.” Rather, these individuals are leaving "because they want to get even richer," he said, adding "We cannot fight poverty if those with the most, and sometimes with a lot, do not show solidarity and a bit of generosity.”
Wrong! The prosperous don’t grow rich when they refuse to let you take their money. They simply keep what’s theirs. Further, it is your statist and socialist policies, Jean-Marc, that keep people impoverished by limiting economic opportunities and punishing those who do manage to prosper by producing. It’s not the duty of the prosperous to make up for your failed policy mistakes.
Meanwhile, across the Channel, the British government has lost another victim of its rapacious policies. Singer James Blunt has decided he wants to become a citizen of Switzerland, where he’s lived since 2005. The multimillionaire says he likes the skiing and he’s even opened his own restaurant. But living in a tax haven seems to be the real motivation. He wants to keep what he’s earned.
His exit from the UK should be no surprise. In April 2010 then-British PM Gordon Brown proposed hiking the marginal tax rate by 10 percent, up to 50 percent, on those making more than £1 million (about $1.6 million). The result: The number of people declaring incomes of £1 million or more fell from 16,000 to 6,000 in the 2010-2011 tax year.
Let’s move across the pond and across the country to California. In November voters approved Proposition 30, which raises the state sales tax from 7.25 percent to 7.5 percent and hikes the top marginal income tax rate from 10.3 percent to 13.3 percent.
This move is likely to accelerate the net migration from California to other states, which totaled 865,444 from 2004 to 2010. What’s interesting is that IRS data that shows that folks fleeing the Golden State head for for states with lower individual income taxe s. Texas, which has no income tax, welcomed 185,122 former Californians during that period. California’s neighbors Arizona, which has a top income-tax rate of 4.5 percent, and Nevada, with no such tax, were the next most popular destinations for refugees. Among the top 15 destination states for ex-Californians, the migration-weighted average of the highest marginal tax rate was just 3.9 percent. That's almost a 10 percent tax cut, in effect.
Of course, businesses as well as individuals are leaving for more freedom-friendly locales. Recently Comcast announced it was closing its three call centers in Northern California. And the Campbell Soup Company will shut its Sacramento plant, which has operated since 1947, transferring production to its facilities in lower-tax and less-regulatory locations like Texas and North Carolina. No wonder. The Tax Foundation rates California’s business tax climate number 48 in the nation, close to the worst. The worst, by the way, is New Jersey. Campbell has announced it is closing its plant in that state as well.
It is clear that when governments punish production, producers flee. So why do politicians continue with such policies? It’s because of their warped moral premises.
They believe that some individuals are entitled by their need to the wealth of others and that it is the duty of those others to serve their needy neighbors or to be forced by government to do so. Worse, they often resent achievement, vilifying rather than thanking and congratulating productive, prosperous individuals. They envy the prosperous and would rather see everyone in society poorer than to see all people more prosperous but some much more prosperous than others.
The only way to stop the politicians who are destroying us is to fight these premises and to arm all producers with the moral certainly that they have a right to their own lives, liberty, and prosperity. The purpose of government is to protect that right, not destroy it.
Hudgins is director of advocacy for The Atlas Society.
For further reading:
*Edward Hudgins, “ France Needs Victims .” August 9, 2012.
*Edward Hudgins, “ California’s Choices: Austerity, Expropriation, Or Liberty .” May 16, 2012
*Edward Hudgins, “ New Yorkers Shrug .” May 31, 2012.
Edward Hudgins is research director at the Heartland Institute and former director of advocacy and senior scholar at The Atlas Society.