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Comment by jvrossb | Hacker News Reader

The relationship gets even more complex because, along with going Galt, simply moving can be a viable option. If moving to Bruxelles from Paris is really easy, the impact of higher taxes in France vs Belgium may be felt very differently than if a) it were more difficult to move or b) there are no places to move to with lower taxes.

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Exactly

There's a point where packing and leaving is easier. And the richest the people, the easier this is.

Governments have to realize that, at a certain point, they are in competition with other countries. Multinational companies and rich people come to mind.

The rich can pay their way through most of the immigration burdens that prohibit the average joe from moving (yes, even to the US)

Only certain types of rich people can pick up and move like that, though. Moving to a new country or even a new city means leaving behind the business connections and infrastructure they've built over the course of years and years. You'd have to be one of the idle rich or work in an industry that is location-independent and knowledge-based. That doesn't describe most rich people.

You're absolutely right about the ability of the rich to buy their way to the front of the immigration line, I just don't see it happening in significant numbers.

Sometimes the money can move instead of the people.

Sometimes even if the money doesn't move away directly, some entirely unrelated money ends up somewhere else building factories, and then somewhere-else starts competing with you and taking away large slices of your business.

Sure, but that has less to do with tax rates.

Depends on how much the tax rates raise the price of labor or impair profitability (and limiting future investment on account of a lack of return).

I'm not saying tax rates have no impact; obviously they can. But taxes levied to addressed collective action problems, where people are actually seeing a return on the taxes paid for things they'd have to fund otherwise, should in fact make labor cheaper. This is also usually dwarfed by things like exchange rates, wages (possibly including minimum wage laws), cost of living, and labor laws - most of which also have interconnections. It's no longer a simple equation in the way that "Hm, my money will be taxed less in that pile than this one" is.

The rich may not physically move their bodies, but what about moving business operations to tax-friendly locations? Especially if you only do it on paper?

What about the flight of manufacturing from the US, c. 1980-2000?

One thing that's interesting is that this realization can itself push multiple ways. Denmark has for the most part concluded that the country is, in effect, a little company in competition with the rest of the world. But it's not only (or even primarily) competing for rich people. Rich people in themselves are just some finite wealth. More importantly, Denmark is competing for market share in various markets, such as services and high-end manufacturing. In some of those markets, just like in tech, a higher-cost, upmarket strategy may be superior to a lower-cost, compete-on-price strategy. So it may be worth goign with higher taxes and a highly educated workforce. I wrote a bit about that elsewhere on HN: https://news.ycombinator.com/item?id=5548497

>So it may be worth goign with higher taxes and a highly educated workforce.

The missing piece is that you don't always have to choose. If the low tax rate attracts businesses (or even just causes corporations to arrange to report all their profits in your jurisdiction) you may end up with quite a lot of revenue even at the lower rate.

The key to that game is convincing all the other countries not to play. If you have low taxes and no one else does, you win. If you and all the other countries have low taxes, all the countries lose and the corporations win.

The U.S. strategy is kind of interesting: The corporate taxes are nominally really quite high, but the largest corporations (i.e. the ones best able to leave or rearrange holdings) don't actually pay them.

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