Why the rich (almost) never flee their country
The German daily newspaper "Die Zeit" debunks the myth of the great tax evader. Even in the face of growing tax pressure, billionaires overwhelmingly remain rooted in the places where they made their fortunes. Here's an explanation.
Donald Trump is rolling out the red carpet for the richest. With his "gold card," a special visa costing $5 million, the American president promises privileged entry to those who bring their wealth to American soil. In one week, nearly 70,000 people have already signed up. The goal: to make the United States a tax haven for the global elite. Yet, this promise of a gilded exile is far less appealing than one might think.
While capital mobility is real, that of billionaires remains very relative. As Die Zeit notes In a comprehensive survey, the fear of a mass tax exodus is vastly exaggerated. “It is therefore more likely that a billionaire will die than emigrate,” observes American sociologist Cristobal Young. Between 2010 and 2015, only 22 American billionaires changed their state of residence, while 7% of them died during the same period.
Even in countries that have increased their taxes, the wealthy are not fleeing en masse. In Norway, after the wealth tax hike, 43 large taxpayers left—albeit with 34 billion kroner, but tax revenues jumped from 18.4 to 28.6 billion kroner in three years. In Germany, the specter of a wealth tax is resurfacing the same threats of departure. Yet the data tell a different story: only 16 of Germany's 170 billionaires live abroad. And those who have left—often to Switzerland—mostly inherited their wealth.
Local attachment trumps tax incentives. “Such entrepreneurs don't hang out on a Caribbean island. They're interested in environmental standards in the automotive sector or debating local politics,” summarizes Zurich-based economist Isabel Martínez. Deep-rooted social capital—professional networks, political influence, family roots—often outweighs the lure of tax havens.
In short, “moving home is no fun for anyone. It's not something wealthy people do willingly or frequently,” says Cristobal Young. Even members of the jet set, like Eduardo Saverin, the co-founder of Facebook living in exile in Singapore, are not in the majority.
Taxes may drive out a few privileged people, but they don't cause a haemorrhage. Germany remains the third-largest nation in terms of the number of wealthy people, behind the United States and China. And a golden visa or the promise of a tax haven won't change much. As the German daily concludes: “Capital may be mobile, but people are not so much.”
