(07-21-2020 08:09 AM)OptimisticOwl Wrote:  Perhaps when their employers decide to close or cut back, some of the leftists here will see directly the results of some of their party's actions. Of course, though, they will accept the MSM's assertion that it is all Trump's fault. They will be comfortably ensconced in their rowboat as it goes over the falls.

I don't know where the point is that taxes get so high that people start leaving to avoid them. I do know that I don't want to find out. If the democrats enact all their tax proposals, I'm quite certain that some will leave. One problem is that the USA is kind of the Hotel California of taxes. Once you are in here, it's hard to leave. That's not a problem for foreign-based multinationals, because they can minimize their USA tax liability with aggressive transfer pricing. But a USA-based multinational is kind of stuck. I would expect them to start employing whatever methods they can--including inversions--to get out. At some point I could see 150-250 of the Fortune 500 relocating overseas. I don't know whether the current round of tax increases proposed by the democrats will get us there, but I think it might.

Obviously, proposals that we go back to 91% would lead to a mass exodus. So why didn't that happen in the 1950s and 1960s? Three big reasons:

1) We had so many exclusions and deductions in our tax code back then that our effective rates were still way, way lower than anybody else's. The effective rate paid by the "rich" didn't really change very much as the statutory rate decreased from 91% to 70% to 52% to 28%, because so many exclusions and deductions were eliminated. As a tax practitioner in the late 1980s, I remember many conversations having to explain to wealthy clients why their tax rate was cut virtually in half by the 1986 tax law but their tax bill increased, because of the elimination of exclusions and deductions.
2) Other countries had even higher rates. When our top marginal rate was 91%, almost everybody else was over 90%, and Sweden was even over 100%. Now the average OECD maximum individual rate is 43% and the average corporate rate is 23% (US is slightly higher than both, when state taxes are included). We go raising rates significantly, and I think we drive investment and growth overseas in a major way. That was actually sort of OK with us during the Cold War, because reindustrialization of Western Europe and Japan were seen as helping keep them away from communism, but that died when the Berlin Wall fell, and we haven't adjusted. Ross Perot said what I had been thinking back in 1992, "In the post-Cold-War era, economic power will be more important than military power." Thirty years later we sill haven't shifted gears.
3) The USA still has huge advantages. We have the largest area of contiguous farmland in the world, and the vast majority of it is connected by the Mississippi-Missouri-Ohio River system that constitutes about half of the inland navigable waterways in the world. That alone pretty much guarantees that we won't starve. Mountains, forest, and lakes to the north, mountains and desert to the south, and two vast oceans east and west pretty much guarantee a high level of military security. Therefore we start out way ahead of most of the world. In the Cold War era, we were willing to give up a lot of economic advantages to maintain a security alliance. But that's not exactly where we find ourselves today. If we need a security alliance today, it's more likely against China than Russia, and we aren't doing very well there.