Bad news for tax-and-spenders. The Internet is making it harder to raise tax revenue.
Governments can still raise taxes, but that doesn’t mean they’re going to raise revenue they had hoped to raise. And for leftists, it doesn’t mean they’re going to inflict the punishment on the rich that they had hoped to inflict.
That’s because thanks to the Internet and the information economy, many businesses can be run from anywhere. Business owners can simply set up shop in another country or jurisdiction whenever the government wants to take more of their money.
A case in point is France. The new president there jacked up the top tax rate from a whopping 48 percent to a whopping 75 percent.
A recent article reports that “Start-up entrepreneurs (are) looking to move their headquarters out of France and taking their families with them.”
With the Internet “it is now possible to work in any corner of the world and come and spend one week a month in France,” said Thibault de Saint Vincent, president of Barnes France, the principal competitor to Daniel Feau.
You can tax people more, but you can’t make them stick around.
It’s yet another reason why cutting the budget deficit calls for spending cuts, not tax increases.