Won’t the wealthy just leave the country?
"Wealthy people will just leave the country if we tax them appropriately"
It is possible that some wealthy people might leave New Zealand in protest against higher taxes on wealth. However, the evidence from countries that have introduced a net wealth tax does not support this claim (OECD. The Role and Design of Net Wealth Taxes in the OECD, p.66). More generally, even the highest earners are less sensitive to tax rates than is often thought. Swedish multimillionaires generally remain in Sweden, despite its high tax rates; American states with higher local tax rates do not see outflows of millionaires (Michael Mazerov, State Taxes Have a Negligible Impact on Americans’ Interstate Moves, Center on Budget and Policy Priorities, Washington, D.C., May 2014). While Australia might be an attractive destination, those moving there would have to pay capital gains tax and income tax at 45%. Other factors also matter. To quote the scientist Paul Callaghan, nations retain people by being places where “talent wants to live”. And talent generally wants to live in countries with safe streets, good health systems, highly educated workforces and a strong rule of law – all of which are supported by tax-financed government services.
Was this helpful?