The already-rich, however, would be a less important prize than the Americans hoping to make it big in the future. If aspiring entrepreneurs and top managers moved to Canada to escape sky-high U.S. taxes, they would start and run businesses there. That could allow Toronto, Vancouver, Montreal and other Canadian cities to steal a march on Silicon Valley and New York City and become the new tech clusters of the continent.
To the Americans who support much higher taxes, this might be a perfectly acceptable tradeoff. Rich people fleeing to Canada would reduce U.S. inequality, and curb the political influence of the donor class — two goals that figure prominently in the political left’s agenda. Cities such as San Francisco and New York would lose some of their dynamism, but at least that might ease the excessive costs of housing there.
In the calculus of fans of higher taxes on the rich, the benefits could easily outweigh the costs. But if lost tax revenue and the weakening of key industrial clusters angered too many Americans, then the U.S., like France, could be forced to moderate its ambitions to chip away at the fortunes of the rich.
This article provided by Bloomberg News.