Immigrate, rather than suffer from a heavy tax burden?

Amol Kapila

I have always thought that if the federal government’s fiscal situation causes this country to go down the tubes, I could always immigrate, perhaps to India, where I imagine I would be welcome and where the standard of living will almost certainly increase. Of course, by many measures, the standard of living in the US will almost certainly increase as well (new technology, probably cheaper travel, better understanding of how to stay healthy, etc.). However, young people in this country already suffer and will only suffer more from a ridiculous tax burden to support unproductive elderly who will end up living up to half or more of their adult lives off the backs of the younger generation. Oppressive taxes, a falling currency, inflation, et al., and all the deterrents to investment (and hence growth) that these will cause, may make life elsewhere more attractive.

However, while I keep the possibility of emigration in the back of my head, I am still skeptical if other countries will be more attractive than the US. Of course, much of Europe, South America, and Africa will probably not be as attractive as the US. India (and perhaps China, if you are OK with their government) is a possibility, as may be isolated countries in Eastern Europe and elsewhere. If nothing else, thinking about exit opportunities is a coping mechanism when faced with the possibility of poor options at home.

Growthology addresses this issue in a recent blog post.

The consequences of U.S. fiscal calamity will go hand-in-hand with globalization. The world is in the early stages of globalization, but already member states in the EU are feeling the effects of combining tax competition with the right of movement. A 2006 BBC report noted that nearly 10 percent of Britons lived aborad, a million in Spain. Two emigrant types dominate: retirees and workers! Here’s a more recent report from the OECD

… the share of immigrants in the OECD population almost doubled from just over 4.5% in 1975 to 8.3% in 2005. It is also noteworthy that 45% of immigrants living in OECD countries in 2008 came from other OECD countries.

The threat America faces is a world that competes for our greatest natural resource: it’s young. If we make the tax climate hellish, the U.S. is going to suffer outmigration as places like Canada, Australia, Brazil, Mexico, Chile realize what an opportunity they have to cream our entrepreneurial talent. If we don’t, and let the deficit spiral out of control, the dollar will fall and workers will go elsewhere for value reasons. There’s already a migratory tension in Europe, waged primarily with favorable tax treatment for high net worth immigrants.

Amol Kapila

Categories

Archives

Immigrate, rather than suffer from a heavy tax burden?

207 comments to Immigrate, rather than suffer from a heavy tax burden?

Leave a Reply

Recent Posts

Blogroll

Meta