Maybe. But Iâ€™ve been thinking a lot about the immigration bill now pending before Congress â€“ especially the conditions undocumented workers will have to meet if they want to become American citizens. One of them is to pay all the taxes they owe.
The new immigration bill may not make it through Congress, but that provision about paying taxes that are owed in order to be a citizen serves as a reminder that paying taxes is one of the major obligations of citizenship. After all, if we didnâ€™t pay the taxes we owe, we wouldnâ€™t have public schools, police and fire protection, national defense, homeland security, roads and bridges, Medicare and Social Security, and other things we need.
So when the super-rich use offshore tax havens to avoid paying what they owe in taxes, theyâ€™re reneging on their duties as citizens. It seems only fair to me that the consequence of that kind of tax avoidance ought to be loss of citizenship. If itâ€™s more important to someone to avoid paying what they owe in taxes than to continue being an American, then let them keep their money. They can become a citizen of the Cayman Islands or Bermuda or wherever else they store their wealth, and come here on a visitorâ€™s visa â€“ if they can get one.
What this tells me, is that the Democrats that make economic policy understand they will have to get serious the next time they are back in power. The big issue here is that just so much of the economic theory around immigration is just plain bad. The big issue is that these economists don't look at citizenship as an asset and look at the opportunity costs lost with changes to the value of citizenship. In reality, illegal immigration is a much bigger theft from the American public than the tax evasion of offshore tax havens.
I would get serious about both issues. The leading users of offshore tax havens are quite wealthy. Most of their "offshore" assets are in fact invested in the US, Japan or the EU. If the US were to start to adopt asset taxation-as other developed countries like France have already done. Ralph Nader and Edward Wolff of NYU have already endorsed such a tax proposal—with the suggestion their be a hefty deduction of $1-5 Million per family. Those that choose to use offshore tax havens would then lose that exemption.
Illegal immigration feeds off concentration of wealth—and makes concentration of wealth worse. We need firm measures to stop these both in their tracks.