If you leave money unattended in front of person who has no money, the temptation is too great for that person to hold his moral code. He will steal the money.
This philosophy had a tremendous impact upon me when, as a young man, I read the “The Sea Wolf ” by Jack London. Wolf Larsen, captain of a seal hunting schooner, a crude and cynical man, was also highly intelligent. He ruled over his ship and terrorized the crew by sheer physical might.
Humphrey, his cabin boy, was upset because his money had been stolen by one of the crew members. He wanted the Captain to exact justice. But in Larsen’s mind, the real crime had been committed by Humphrey who had left his wallet out in plain view. Larsen believed that the temptation of “free” money was too great for a desperate man. In his opinion, Humphrey had corrupted an otherwise innocent man and it was he, therefore, who had committed the greater crime.
In 2011, Facebook founder Eduardo Saverin renounced his U.S citizenship after cashing in on the sale of his Facebook stock. Mr. Saverin, born in Brazil, has lived in Singapore since 2010 and now plans to remain there. Singapore has a maximum personal income tax rate of 20 percent with zero taxes on capital gains. Comparatively, the U.S. has a 39% tax bracket for its highest earners and a 15 percent captital gains tax. Saverin’s net worth is estimated at close to 4 billion dollars, so he saved close to 600 million dollars by renouncing his U.S. citizenship (the figures here are a guesstimate as the sale price was not officially published). Senator Chuck Schumer (D-New York) was “appalled” by Eduardo’s move, then offered legislation that would bar people like Eduardo Saverin from ever returning to the United States.
The undeniable reality is that with a capital gains rate of 15% and an income tax rate close to 40%, Eduardo did what a rational man would do…he looked for ways to keep as much of his money as possible. Given the structure of the IRS code, he was forced to make a decision he probably would not have made otherwise.
Clearly Saverin profited by having lived in the U.S. Further, he benefited by going to one of its top universities. He had access to a system and culture that allowed companies like Facebook to thrive. But, but when faced with the option to pay the tax to a system that allowed him to create such wealth, one could argue that he chose personal enrichment over ethics. Simply put, he cheated.
One could also argue that a system so confiscatory leaves a rational being, who works hard to amass his financial largesse, little choice but to seek financial asylum elsewhere. Given the complexity and