Democratic "exit tax" proposals in 2012 (Charles Schumer) and 2015 (Hillary Clinton) had me remembering the Reichsfluchtsteuer, the 25% tax that the Nazis imposed on Jews trying to flee Germany in the 1930s.
Now the 2020 Democratic presidential candidates who back a "wealth tax" — Senator Elizabeth Warren and Senator Bernie Sanders — are also both backing Reichsfluchtsteuer-style proposals. "Sanders' wealth tax plan includes a steep 'Exit Tax' similar to that proposed by ewarren," an economic policy reporter at the Washington Post, Jeff Stein, tweeted yesterday.
A reporter who covers taxes for the Wall Street Journal, Richard Rubin, raised the prospect that people will start leaving even before Election Day. "It's worth watching/thinking about effective dates. If a wealth-tax proponent has 55% odds of winning on 9/1/20, do people start renouncing citizenship? 75% odds? And does the candidate then say the exit tax will be retroactive to 9/1/20? To election day?" Rubin tweeted. "Exit tax and wealth tax would have to be in the legislation enacted in 2021 or later. So how do you handle people who leave before?"
The Warren plan includes "a 40% 'exit tax' on the net worth above $50 million of any U.S. citizen who renounces their citizenship," while the Sanders plan, unveiled yesterday, "includes a 40 percent exit tax on the net value of all assets under $1 billion and 60 percent over $1 billion for all wealthy individual seeking to expatriate to avoid the tax."
As I pointed out back in 2012 and in 2015, the Universal Declaration of Human Rights, a product of the United Nations, says, "Everyone has the right to leave any country, including his own" and "No one shall be arbitrarily deprived of his property."
The U.S. already has an expatriation tax that makes people renouncing their U.S. citizenship pay all the capital gains tax they would owe on accumulated gains under what is known as a "deemed sale rule."
As I also pointed out in 2012 and 2015, it'd be better if these politicians tried to create tax structures that attracted rich people here from other places, rather than trying to trap rich people here against their will by making it prohibitively painful to leave.