Sunday, October 31, 2010

High Taxes Matter

You doubt that high taxes matter?  Then visit Monaco.  A small strip of land, 0.78 square mile, inhabited by some 30,000 residents, flourishes as a tax haven.  The little principality levies no income tax on individuals, no capital gains tax, and no inheritance tax on direct family line members.  It assesses value-added tax on purchases, social insurance tax on employees, and a modest stamp tax on the sale of a business or real estate.

As a refuge from high taxes, Monaco became famous when Bjorn Borg and Ingmar Bergman decamped from Sweden for Monaco.  So many others have taken up residence in Monaco for tax purposes that the principality reclaimed 374,157 square meters of land on which to build more apartments.

To gain residency in Monaco, one has to live there six months a year. Monaco has plans for another 275,000 square meters when the global economy recovers.  Modest apartments rent for $10,000 a month and higher for larger units.  Purchase prices for small units run in the millions.

Have a look at the benefits high tax states provide for low tax territories.

(Photo credits:  Katonams)

1 comment :

Unknown said...

Xmlblog, you don't get it at all. The point he was making was that if you tax the rich too much; they will just leave the US. Good by to all the little job and industries that flourish around these wealthy people; restaurants, waiters, dry-cleaning, shops, housekeeping, ect. Good by to the taxes that would be paid in America, if you raise the taxes to the point where the rich leave.