French or American, Zucman and Saez's proposals are a house built of Sand
Reader comment on: France Meddles in U.S. Election
Submitted by David S Lesperance JD (Poland), Feb 25, 2020 10:56
Gabriel Zucman and Emmanuel Saez are all over the news these days promoting their recent book. They started out with a bang by making the headline claim that Billionaires are paying a lower tax rate than the bottom half of Americans. I will leave it to others to debunk their analysis on this point.
I would like to focus on another patently false point they have been making, including in a Washington Post OpEd. Namely that the US is not subject to tax competition with other countries for its wealthy taxpayers. Specifically in their WP piece, they claim the following:
"The situation in the United States is different. You can't shirk your tax responsibilities by moving, because U.S. citizens are responsible to the Internal Revenue Service no matter where they live. The only way to escape the IRS is to renounce citizenship, an extreme move that in both Warren's and Sanders's plans would trigger a large exit tax of 40 percent on net worth."
As someone who assisted my first wealthy American client to permanently legally leave the US tax system by renunciation in 1990 and who has helped hundreds of others do the same over the past three decades, I can safely state that Mr. Zucman and Mr. Saez's statement is ridiculous. This 'extreme' move has been taken by thousands of wealthy Americans annually for years. In fact the reason the numbers are not even higher is that the system to get an interview to renounce US citizenship is tremendously backlogged!
Ever since the Democratic POTUS candidates have changed their 'Tax the Rich' rhetoric from "Getting money to spend on good things" to "Taking money from bad people", my phone has been ringing off the hook. Should the Democrats win the Presidency and both houses, at a minimum there will be a doubling of capital gains rates. If the progressive wing wins out, there is also the distinct possibility of a Wealth Tax, increased estate taxes, and a major jump in the ordinary income rates.
When faced with these proposals Wealthy Americans should consider how they would deal with the threat of a wildfire. Almost automatically their response would be to immediately purchase home insurance and get fire escape plan. They would not do this because they think there is a more than a 50% PROBABILITY that they will have a fire. Rather, they understand that fire is a POSSIBILITY and if it were to occur when they do not have insurance and an escape plan, the impact would be devastating. I then tell them to apply this same logic to their family's wealth.
Due to the numerous uncertainties which will impact the upcoming election, they are not letting their party allegiance, voter preference or overly optimistic predictions blind them to the logic that they should plan for all possible outcomes. Hope for the best....but prepare for the worst!"
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