New Taxes In “Build Back Better” Proposition Will Push American Riches Abroad

Nancy Pelosi and Joe Biden have been busy all week trying to put a good face on the unpopularity of the “Build Back Better” budget reconciliation spending bill, even among many Democrats. Whether the Congressional Budget Office ever “scores” the cost of the bill, and whether it comes in at the currently advertised $1.75 trillion or even above the originally reported $3.5 trillion, the bill is sure to include massive new taxes. 

The administration will, of course, say that all of the new taxes will only penalize the ever-reliable households with incomes over $400,000. Higher rates and closed loopholes will be advertised as the “pay-for” on the spending bill, which we will continue to be told, “costs zero.”

Using the rich to leverage a way to say the bill has no cost will have unexpected consequences. The truth is that the rich are very creative in minimizing their exposure to federal taxes and will look to shelters outside of the U.S. to reduce exposure to the new spending bill’s taxes.

The trend has increased recently, even before the ambitious spending plan fails or succeeds in getting passed. Swiss banks have seen 40 percent increases in profits and billions of new American investments just since the beginning of the COVID pandemic.

International offshore investment firms report more than three-fold increases in the same period of Americans applying for second passports and establishing detailed plans for avoiding raising taxes and the unpredictability of American political disruption.

Most Democrat politicians view wealthy Americans as commodities with no agency or choice on living or doing business. Even though the evidence of Americans fleeing high tax and regulatory states like New York and California for more favorable environments in Texas, Florida, and Tennessee is abundant, Washington politicians never seem to get the clue.

Despite Democrat propaganda, the American economy cannot afford to lose American wealth to more friendly offshore jurisdictions. The loss to small businesses and ordinary American jobs is usually underrated but is very real.

When the message is constantly focused on how the government can extract more revenue from wealthy Americans, it is easy to overlook the losses when investment in capital production is shipped overseas. A “fair share” in taxes doesn’t help any American when a business or individual decides to go to “no share” by moving away.