Around the World, Citizens Flee High Tax Rates

Fans of smaller government and lower taxes will hardly be surprised that financially successful people in France are leaving in the face of new 75% income tax rates on the highest earners. Under Socialist President François Holllande, this new rate will become effective in 2013 and has led many of the highest earners to leave the country- with their money. Now, this punitive tax rate has hit the limelight. 

Gerard Depardieu, arguably the most internationally recognized star of French cinema, has announced he will be leaving France due to the punitive tax rate. The French government has described this as pathetic and unpatriotic. Depardieu’s response? “I am leaving because you believe that success, creation, talent, anything different must be sanctioned.”   He is reportedly looking into Belgian citizenship and purchased a home in that country, which does not impose income or capital gains taxes. Belgian newspaper La Libre Belgique reported on the move with the headline “Cross-country actor seeks clement fiscal climate.”  

This is not unique to France. In fact, it is already coming to pass in the United States. States with higher tax rates such as Maryland, California, and New York are losing residents while states with little or no income tax such as Arizona, Florida and Texas are gaining new inhabitants. This is no coincidence. Between 2007 and 2011, during which there existed a “Millionaire’s Tax” in Maryland, over 31,000 residents left the state. A study found that this cost Maryland $1.7 billion in tax revenues. 

According to the Census Bureau, one of the most common state-to-state moves in 2011 was New York to Florida. California is also seeing an exodus of taxpayers. According to The Manhattan Institute, “States with low unemployment rates, such as Texas, are drawing people from California, whose rate is above the national average. Taxation also appears to be a factor, especially as it contributes to the business climate and, in turn, jobs. Most of the destination states favored by Californians have lower taxes.” It is clear that high taxation has reached a point of diminishing returns and, around the world, citizens have had enough. 

It seems that lawmakers have forgotten a crucial point: Citizens do not work to succeed in order to subsidize their government. Government should exist to provide an environment in which citizens are able to succeed for themselves.