You can’t make people pay taxes in your Province – You need to persuade them

I’m forever struck by the stupidity and irrationality of politicians.  Consider today’s example, François Legault, leader of Québec’s Coalition Avenir Québec (CAQ), commenting on the decision of Canadian tennis star Eugénie Bouchard to become a resident of the Bahamas:

 “I think we should live where we were born, where we learned to play tennis and pay taxes in our country.”

As a starting point, that’s all very nice, but your thoughts on where people should or should not live is of no fucking relevance to where others should choose to live.  Eugénie Bouchard can live where she wants.  And, if she wants to live in the Bahamas – a tropical paradise – rather than, say, Québec – a province that descends into a deep freeze for five months of the year – I doubt many reasonable people will second guess that choice.

But, what caught me is the reference to “taxes”.  Apparently that’s all we are to politicians like Legault, sources of cash to be harvested to fund their priorities.  Personal interests, preferences, aspirations be damned, our job is to stay here and pay our taxes.   And people wonder why politicians are loathed?

Eugénie Bouchard can live any place in the world she wants, and Legault thinks that she should choose to live in a place that takes 53 cents of every dollar she makes.  Why on earth would she do that?  Newsflash for Mr. Legault, people respond to incentives. If Quebec imposes a cost of living in Quebec of 53 cents on every dollar earned and the Bahamas imposes a cost of zero cents on every dollar earned, well, golly gee, don’t be surprised if people respond to those incentives and choose to live in the Bahamas.

It’s an odd complaint to be coming from a right-wing politicans (though perhaps not surprising given the CAQ’s populist leanings), since usually whining about “the rich” not paying taxes is the purview of the left.  But it highlights a key point that politicians of all stripes need to recognize, in a free society, you can’t make highly skilled and talented people live in your country (or province) – they can often live anywhere they choose – and so you can’t make them pay taxes.  You have to persuade them to live (and pay taxes) there.

Tax policy isn’t the only factor, of course, in persuading them to stay: there are no shortages of attractive places to live that impose significant taxes, but provide meaningful other amenities (e.g., the rule of law, no corruption – admittedly and area where Québec has struggled – security, decent restaurants and theater).  Cities like New York and London are filled with people who could save a fortune in taxes if they were willing to move to (much less desirable) places that aren’t New York or London.  But it is A factor, and you need to recognize that if you impose hefty taxes, it’s “the rich” (i.e., often highly skilled individuals like Bouchard) who are most able to move somewhere else.

Did Bouchard move to the Bahamas because of taxes?  I don’t know – taxes aside, wouldn’t you rather spend your January in the Bahamas than Montreal?  But so what if she did?  That’s not a reflection on her, that’s a sign that Québec doesn’t offer her a package of amenities and taxes that make it a more attractive place for her to live than the Bahamas.  Rather than badmouthing Bouchard, Legault should be thinking about why that is and what he and his party can do about it.

 

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