High tax jurisdictions suffer a loss of people. Since a lot of those people are movers and shakers–smart, talented, skilled, dedicated, and hardworking–the effects of the resulting brain drain are likely to be quite deleterious indeed.
This, of course, isn’t just the case in places like London. It would also be the case in the United States, if higher taxes become a reality. And we may yet face this depressing future. We have known for quite a while that the Obama Administration wants to raise taxes. Curiously enough, the fiscal situation has been allowed to deteriorate to such a degree that one can easily envision the President and members of his Administration informing us–with great sorrow and regret in their voices, of course–that raising taxes is the only way to contend with the truly awful deficit and debt numbers we see confronting us these days.
There is justifiable concern that we may yet experience a double-dip recession. There is no surer way to have one than to enact a tax increase that comes on the heels of the recession we just now appear to be clawing our way out of. But we appear to be setting the table for a tax increase thanks to our fiscal situation. It will be no fun at all to deal with the decreased economic activity that follows, not to mention dealing with the phenomenon of hordes of talented people voting with their feet and taking their talents to jurisdictions that don’t punish wealth and success.