This blog entry centers around a post by “Simon Black of Sovereign Man,” a guest on the ZeroHedge blog. “ZeroHedge” discusses economics—but not the same way that The Wall Street Journal does. Think of Tyler Durden, Brad Pitt’s character in Fight Club explaining world markets to you over a beer in a honkytonk. That’s “ZeroHedge.”
Today, “Simon Black of Sovereign Man” comments on plans by Democratic Senators to punish an entrepreneur. (A super-super wealthy, and apparently ungrateful, entrepreneur, to be sure.) Eduardo Saverin, co-founder of Facebook, plans to renounce his US citizenship, apparently in order to save on taxes. In response, Senators Chuck Schumer and Robert Casey Jr. propose a law punishing people who renounce their American citizenship to avoid taxes.
Perhaps we should be asking ourselves: Why do job creators (like Saverin) feel the need to renounce US citizenship?
Take it away, “Simon Black.”
I’ve been in the US for a little more than 24-hours. And having flipped through the TV channels trying to figure out what useless drivel big media is passing off as ‘news’, I realized that I’m going to vomit if I hear the word “fair” one more time.
This concept of ‘fair’ seems to be dominating discussion of the US government’s dismal fiscal condition. The talking heads say that it’s ‘fair’ for wealthy Americans to pay higher taxes and bail the country out… or that everyone needs to pay his/her ‘fair’ share.
The whole logic is absurd: you do not ‘fix’ the country’s fiscal imbalances by giving the idiots in charge even more resources to squander… it’s like dumping gasoline on a forest fire. Somehow the debate seems to have missed this point.
This ‘fair’ nonsense is also very dangerous. Just ask any three-year old– ‘fair’ is completely arbitrary. It’s like a Wiki version morality… if enough people agree on it, it’s fair.
In this case, ‘fair’ is defined in the sole discretion of those who are the direct beneficiaries of confiscating other people’s money. But let’s look at the numbers:
According to the IRS statistical database, the top 1% of income earners in the United States pays roughly 40% of all US individual income tax. They also get audited at least 5-times more than anyone else. Fair?
The other major complaint seems to be that the wealthy are ‘abusing’ capital gains rules in order to pay a 15% rate instead of a 35% rate. Duh. That’s why they’re wealthy, and stay wealthy… they don’t WORK for a living, they OWN assets which are subject to capital gains.
It seems so bizarre that a country once regarded as the freest, most economically enviable in the world would treat its productive citizens with such hostility.
I’ll readily concede—in many ways, Eduardo Saverin isn’t the most sympathetic figure. Apparently his family moved here years ago because they felt threatened in their home country (Brazil). So, yes, that does make Saverin an ingrate. As Senator Schumer said when he announced his proposed bill (which I’m calling the “Eduardo Law”): “Saverin has turned his back from the country that welcomed him, kept him safe, educated him and helped him become a billionaire.”
That’s true. It’s also beside the point.
America needs to attract entrepreneurs, not repel them. Many entrepreneurs may be greedy, but they also create jobs and spur economic growth. Growing economies do a much better job of paying out benefits. More specifically—they do a better job of generating economic growth that results in larger tax revenues that pay for a dizzying array of government benefits.
You can print all the government checks you want, but if the government doesn’t have enough money…
The world economy is changing at a dizzying rate. The businesses that will be driving successful economies and generating wealth ten years from now may not have been invented yet. Bright, creative and driven people like Eduardo Saverin will create those businesses.
Do we want them to create those businesses here, or in some other country?
Does it feel good to stick it to the super-rich? Sure it does. I’ll readily concede that some of the super-rich spend so lavishly and ostentatiously that it’s hard to resist that inner pull to seek schadenfreude. Especially when economic times are as tough as they are.
Having acknowledged that, ask yourself: How much tougher will economic times be in the future if the next generation’s Eduardo Saverins or Mark Zuckerbergs choose to set up shop in some other country?