[petre]

Yes, a flat tax (percent) is proportional to the amount of income one earns. So if you earn ten times your neighbour, you pay ten times the amount of tax. The problem is once it passes a certain threshold, well off people will employ tax consultants and lawyers to avoid paying taxes, bribe politicians to obtain asymetric advantages etc. Increasing taxes "proportionally" (progressively) would only have the adverse effect: wealthy people would only be more likely to avoid paying taxes, some would even flee their tax jurisdictions. It would only impact the middle class, which is getting poorer as we speak and we'd end up with feudalism. That's why tax the rich doesn't really work. You are taxing the ones that are already good at tax avoidance.

[analog31]

In my view, you've hit on the main issue, which is that "tax avoidance" is coupled with "democracy avoidance." Notably, the rich have disproportionately higher power over government policy, which they use to their benefit. Democracy avoidance includes measures to limit the effect of elections on policy, such as voter suppression, gerrymandering, and so forth.

This is one reason why I'm not worried about letting the rich leave the country. How would it be a net loss? Their wealth is primarily hoarded rather than spent, and they use government policy against us. They would still need our markets if they did want to do something productive. I've heard New Zealand is nice.

[petre]

Unfortunately I don't see any solution to this problem other than doing away with career politicians and swirching to time limited mandates. Career politicians eventually go corrupt. Rich people's capital run investments. The wealth is not hoarded, it's almost always invested, otherwise it's eventually lost. Without the rich and investments, your country could look like Mongolia and you could ride a horse to work and live in a teepee, which is not necessarily bad, just different. Yes, New Zealand is a nice place to live but it's economy is dwarfed by the US economy and so are the money making opportunities there. It's not even in the G20 and it's main exports are agricultural products, fish and machinery.