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The Republican party is generally claimed to be the party of fiscal responsibility. Note the term "claimed" here; I do not think the record of Republican governance proves this claim at all well, but nonetheless the default expectation seems persistent. When I was younger, this was certainly a selling-point of the party to me, and I voted for Bush II in the hope that he'd get government spending under control. Then 9/11 happened, and he wasted trillions wandering our military through the middle east.
Now the debt is very bad, and people are once more raising the banner of Fiscal Responsibility. Is it in Republicans' interest to enforce "fiscal responsibility", and if so, how? If we were to seriously cut spending and raise taxes, as people claim the fiscal situation demands, this would almost certainly cost us the next election. In the best possible case that I can see, we would be expending our political power to create stable economic conditions for our opponents to then rule. The more likely case would be us expending our political power to ameliorate spending that our opponents increase to gain power for themselves, resulting in a much shakier economy and our complete political irrelevance.
Why not offer the Fiscal Responsibility mantel to the Democrats? The economy is very complicated after all, and they are at this point clearly the party of Expert Opinion: who better to determine and implement the hard-nosed measures necessary to right our economic vessel? When I was younger, the obvious rejoinder would have been that they would do a bad job of it and disaster would result, but it seems to me that we have not done all that much better, and disaster seems likely in any case. If disaster cannot be meaningfully avoided, then why expend limited resources demanded by a serious political conflict on an unfixable resource-sink of a problem? What's the actual plan, here?
The US unironically needs to raise taxes on the rich (I mean actual rich, not those earning large salaries). (Non-land) Wealth taxes are usually bad, but with the global reach of the IRS and their policy to tax worldwide income, there's no reason the US can't easily adopt a policy of taxing worldwide assets without too many bad side effects. This would raise significant money, imagine even a 1% worldwide non-US housing asset yearly tax on all US permanent residents and citizens (temporary residents get a pass because you don't want to discourage smart wealthy people from the rest of the world coming to the US), it would easily fill the black hole.
I think that’s actually a terrible idea. While wealth is global and markets are global, citizenship is bound to a government and land, while the humans that create it are not. What I fear would happen is that not only would wealthy and smart people abroad not want to come here, but that a good number of people would renounce citizenship and simply go to a place with good infrastructure and low taxes. A smart country like Ireland or Russia or Korea could reap the benefits of our stupidity simply by not taxing the geese laying the golden eggs. All they have to do is resist the temptation to tax the free money coming in and reap the benefits of jobs created, inventions patented, wealth spent in their country by billionaires fleeing high taxes in America.
Wealth of any sort has pretty free exit, as do rich people.
There is no place on God's green earth free from the clutches of the IRS; well, at least no place that a normal American would want to live in. The US already taxes Americas overseas on their worldwide income and the IRS has enough fangs that the victims have to pay up or face real consequences. Doesn't make too many Americans renounce their citizenship each year. I am also proposing to extend the long arm of the IRS to American assets abroad too at the same time you start taxing wealth, that way there's no point for the Americans to move their money overseas as it's gonna get taxed anyways...
Of course, as you say, there will need to be an exemption for temporary residents in the USA otherwise people aren't gonna want to come here, but those people are on average much poorer than US citizens and so the loss of income from not taxing their wealth would be minimal.
I mean it depends on how much you raise the taxes. You might get away with a modest 5% increase in taxes, maybe even 10%. But if you go too high, the victim of those tax increases is going to be much more interested in being not American because nobody sane is going to agree to give a country he doesn’t even live in 60% or more of their earnings. Why do that when you can become Romanian or something and only pay a third or less in tax? What would these overseas Americans gain from remaining American when the things they have in other countries can be just as good?
Empirically, there are some rich people living in Sweden, where the total income tax can be 55.6%.
If you go to a poor person and tell them they will have to pay another 20% of their income as taxes, it might well be that they will face the choice between emigrating and raising their kids under a bridge.
By contrast, if you tell someone making 1M$ a year (after taxes) that they will have to pay another 200k$ of taxes, they will have to adjust their life-style a bit or accept that their net worth will grow slower than it would otherwise.
By revealed preference, the US seems to be a pretty great place to be rich. Rich people could already move to poorer countries where they could afford to be attended by dozens of servants, and yet they mostly don't. I do not think that having to cut the private helicopter and riding limo like the plebs would change that.
If you are rich, you can afford to worry about tail risks. Despite all the CW, the US still has some of the best institutions in the world. If you are accused for some political crime, would you rather deal with the US justice system or the Romanian one? Do you want your kids to go to Ivy League or get the best Romanian education? Or consider political stability: the US voted for Trump, while Romania voted for some pro-Russian populist. While their courts invalidated the latter election, I have much more trust in US institutions to limit the damage a populist can do. Romania has been in the NATO since 2004, which limits the risk of invasion, at least as long as NATO continues to be a thing. Mainland US has not faced a credible threat of invasion by foreign powers since at least 1900. Likewise, the US has a great track record of not having mobs or governments expropriate rich persons or guillotine them. If Romania experiences a severe financial crisis in 2045, "expropriate rich ex-Americans" might be a platform which would be popular with the plebs and tolerable to the native elites.
Then there are practical costs to emigrating. You might want to learn the language, lest you stay part of a small expat community. You will need to spend a lot of time to get the design of your villa just right, again.
Then there are power costs. Your bank account can be converted to the local currency just fine, but if you care about having political power where you live, you will have to build this up from the scratch. You know the proper etiquette for bribing a US senator, but likely you will not know much about how the local politics work, who will stay bought and who won't. Likely, your opponents will be local oligarchs who have been playing this game for generations. The elites will not see you as one of them, but as a resource to be exploited.
Wealth and income have nothing to do with each other in Sweden. You become wealthy by either starting wealthy, starting a company, or in extremely rare cases invest your way there (or win the literal lottery). Capital gains are practically not taxed in Sweden so being wealthy here is great! Having a high income what's taxed and that doesn't lead to wealth.
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