January 30, 2023
By the early 300s AD, ancient Rome’s population was in significant decline.
Modern historians haven’t nailed down a precise number for Rome’s population— and estimates vary— but the clear consensus is that population peaked in the first or second century AD, and then began a rapid fall.
We know the reasons why. Roman citizens were sick and tired of the corruption, inflation, taxes, crime, social decline, constant chaos, etc. and they sought greener pastures elsewhere.
Bear in mind that this was happening at a time when the barbarian invasions had already begun. Every year there were more and more border incursions from the Goths, Alemanni, etc., many of whom stayed and settled in Roman territory.
This is important to understand; even though Rome was gaining population from these migrant tribes, its overall NET population was still declining.
This means that the number of Roman citizens leaving must have been staggering.
But Emperor Diocletian decided to put a stop to all of it, and in the late autumn of 301 AD, he proclaimed his infamous Edictum De Pretiis Rerum Venalium, or Edict on Maximum Prices.
In addition to setting strict wage and price controls on EVERYTHING across the empire (in an absurd attempt to ‘fix’ inflation), Diocletian also ordered for taxes to increase… AND for everyone to be tied to the land.
No one could leave. No one could quit their job. All occupations were made herediatry, so children had to follow their parents’ profession. It was essentially the start of the feudal system.
Naturally Diocletian’s decree did not have its desired effect. Despite the emperor imposing the death penalty on anyone who did not comply, Roman citizens flouted the rules, and the population declined even more.
It’s hard to not think of this story when reading about the nascent suicide pact being discussed between several of the most ultra-progressive, high tax US states.
Earlier this month, the states of California, Connecticut, Hawaii, Illinois, Maryland, Minnesota, New York and Washington each introduced bills to impose state-level wealth taxes on residents.
This is not a coincidence. Politicians are deliberately coordinating with their counterparts in other states to ensure that the legislation passes in ALL of the eight states.
As one state senator put it, they are working together to ensure they don’t “get pitted against each other.”
Heavens forbid there’s actually competition among the states to reduce their tax rates and attract the most productive talent and businesses. That would be unthinkable.
So instead they’re all signing up for a terrible, destructive idea so that they can all be anti-competitive at the same time. It’s genius!
But of course, these people are totally delusional.
These are the states who, like Ancient Rome in the first and second centuries AD, have already been losing a LOT of people.
California has said bye bye to hundreds of thousands of residents over the past few years since the start of the pandemic.
This isn’t a huge number in terms of the state’s overall population. The problem is, though, that a huge percentage of these people fleeing California are wealthy, high-income earners.
In other words, California is losing some of its most valuable taxpayers.
Remember that the top 1% of taxpayers in California pays roughly FIFTY PERCENT of the state taxes. So losing even a few hundred thousand people can be devastating to the state budget.
Ditto for some of the other states who have joined this suicide pact, like New York and Connecticut.
In fact Census Bureau data show these eight states are among those with the fastest declining populations. And those who leave tend to be higher-earning taxpayers. So their state budgets are being gutted.
It’s also clear that the people who leave aren’t going to other high-tax, ultra-progressive states. Californians aren’t leaving en masse so they can live in New Jersey or Illinois.
Instead, they are moving to low tax, low regulation states like Nevada, Idaho, Texas and Florida. And this new wealth tax movement will likely cause an even greater exodus.
Of course, California has a plan for that too. If its wealthier citizens decide to leave, California’s government will simply continue to enforce the tax even AFTER people relocate to another state. Not even Diocletian thought of that!
(Naturally that would be completely illegal, and the State of California’s petty arrogance will be eviscerated by the Supreme Court at some point down the road.)
It’s not just individuals; businesses are also relocating out of these states. A report from the Hoover Institute found that Texas was the number one destination, attracting at least 114 businesses which were previously based in California from 2018-2021.
Obviously this business migration trend is going to have an even deeper impact on California’s state tax revenue.
But, just like Diocletian, they’re willfully taking a bad situation and making it much worse. Rather than simply stop the destructive behavior that’s making everyone want to leave in the first place, the politicians are doubling down and giving people even more incentive to relocate.
It’s hard to imagine that such a level of incompetence could actually be real. And yet it is.
Fortunately this is a very easy problem to solve.
First, it’s important to recognize that, whatever these politicians promise, their so-called wealth tax is NOT just for the ultra-wealthy.
Perhaps at first it will only affect $50MM+ households. But like nearly all taxes, it will eventually find its way down to the professional class, then upper middle class, etc.
Remember that even the original income tax was first meant to only hit the ultra-wealthy.
But soon the thresholds were lowered and the tax brackets expanded to cast a very wide net.
Same with the Alternative Minimum Tax; it was initially passed as a tax on a handful of people. Today it ensnares millions.
Wealth taxes will likely be no different. The tax base will expand, the tax rates will increase, and before you know it, it will be part of your annual tax ritual. Never underestimate the potential creep of a new tax.
Second, also recognize that where you live ought to be a deliberate decision. Obviously everyone has a personal choice to make. But it’s an important decision, affecting everything ranging from potential wealth taxes, to how your children are being educated (indoctrinated).
It makes sense to examine your values and priorities, and then make a decision about the best place to be.
Prioritization is important. No place is perfect. No place will tick every single box on your list. But you will likely find somewhere that matches the most important priorities, plus a few nice-to-have’s.
If taxes and freedom are priorities, you might see a significant boost by moving to another state where your values are shared.
There’s also the possibility of moving abroad, which can often have an even larger impact on lifestyle.
And although US residents are taxed on their global income, you can use the Foreign Earned Income Exclusion to make $120,000 in 2023 without owing taxes to the US. When you double that for married couples, and add in the housing benefit, you’re at roughly $250,000+ in nearly tax-free earnings.
You could also consider going to Puerto Rico— a US territory that sets its own tax rates.
In Puerto Rico you could cut your income tax rate to 4% and your capital gains to 0%. Those who qualify, and meet some other conditions, will owe nothing to the federal government. In many cases you don’t even have to file a federal return anymore.
Even if you’re not ready to go… or you have certain constraints in your life preventing a move at this time, it at least makes sense to consider where you might go just in case you need to make that decision down the road.
Do the research and analysis now. It will make life much easier in the future.
To your freedom,
Simon Black, Founder
Sovereign Research & Advisory