The Flight of the Golden Geese

International Tax & Immigration Expert David Lesperance on the Increase in Wealthy Americans Renouncing their Citizenship

“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails. — William Arthur Ward

Earlier this week, President Trump pardoned two turkeys in what has become an annual White House tradition. His successor-to-be, Joe Biden, has signaled that he will be less merciful in his treatment of a different kind of bird — the proverbial “goose that lays the golden egg.”

Biden has championed his plan to raise taxes on individuals with income above $400,000, including raising individual income, capital gains, and payroll taxes. While this allegedly will bring in an additional $3.3 trillion in revenue over the next decade, the true figure will likely be lower, as growth slows and the tax base shrinks in response to higher taxes. This will partly be driven by the accelerated flight of the wealthiest individuals to more tax-friendly jurisdictions.

David Lesperance is an international tax and immigration expert who sees the writing on the wall for both High Net Worth individuals (HNWIs) who remain in places like the United States, and the politicians who are depending on these Golden Geese to stay. His firm, Lesperance & Associates helps clients select from a menu of more favorable jurisdictions to legally keep as much of their wealth as possible. This year alone, a record 6,045 Americans renounced their citizenship, and many more obtained “back up” citizenship in counties like Cyprus — including former Google CEO Eric Schmidt.

While progressive taxation schemes like Biden’s might sound good on paper, the end result is a shrinking and fragile tax base as fewer and fewer rich stick around to get “soaked.”


David joined me to talk about the options for HNWIs, and the danger to countries like the United States of going the way of France or the UK in their treatment of their Golden Geese. We will also discuss how average Americans can achieve the freedoms that libertarians value without convincing a majority of voters of the merits of libertarian principles.

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The Flight of the Golden Geese

Bob Zadek: Welcome to the Bob Zadek Show, the longest running live libertarian talk radio show on all of radio. Thank you so much for listening this fall Sunday morning. About a decade ago, my imagination was captured by a wonderful nature movie, a documentary called The Great Migration. It was a story about how many species of birds would fly tens of thousands of miles to change from one climate and environment to another. I was impressed by their determination and how they are able to navigate and their biological determination to survive. If you recall that movie, they had transmitters and little TV cameras attached to some of the birds. There were planes and gliders that flew along with them. It was quite a dramatic movie.

This morning, we will focus on this morning’s guest and his book, The Flight of the Golden Geese. This is not about migratory birds. This is about migratory humans, specifically high networth individuals — the producers of the world’s societies, and how they are moving from one jurisdiction and country of domicile or citizenship to another based upon that government’s tax policies on an accelerated basis. They become expatriates and leave one country for another for the sole purpose of preserving their wealth. These individuals have found themselves to be targets of governmental tax policy.

This morning’s guest, David Lesperance is an immigration and tax specialist. His area of expertise is the entire world. David spends his time studying tax and immigration policies of countries in the first, second, and third world as they are often divided.

He advises his clients, who want to live in peace in an area where society is calm, and where rights are protected, including the rights to enjoy the benefits of your hard earned wealth. David helps his clients if they find themselves living in a jurisdiction where those important elements of a comfortable life, freedom, respect the property rights, and preservation of your property are under attack. David will share what he has learned with us.

What are the policies of countries and jurisdictions around the world that will cause individuals and the more productive elements of that society to leave? What are the governmental policies that chase this valuable natural resource out of the country? And what are the policies that draw these individuals to that country? So my friends, hold on to your passports for a minute, and let’s welcome David to the show. David, welcome to the show this morning.

David Lesperance: Nice to be here, Bob. My pleasure.

Flight of the Golden Geese and the Demonization of Wealth

Bob Zadek: Now, David, as I said, in my introduction, your constituency are individuals of countries who have found that the tax or political policies of one country are becoming more and more oppressive and they seek advice on how to cure that problem. They don’t like the heat, and they want to leave the kitchen. Now, what are the kinds of policies that you have observed that cause individuals living to make this dramatic lifestyle change? After all, one doesn’t change his citizenship or country of domicile overnight. It’s a pretty significant decision. What are the policies that chase them out?

David Lesperance: Well, that’s really looking at the history of immigration, and what are the motivations that have caused humans to migrate throughout history. Sometimes they’re being driven up by an unfavorable political situation, sometimes they feel that the fruits of their labor are being unfairly confiscated, or outright confiscated. Sometimes it’s war, sometimes it’s love. Sometimes it’s a sense of adventure or opportunity.

And what is really quite interesting is, the United States, for most of its history, has been the recipient of immigrants, who have decided that the deal that the United States offered was better than the deal that they had in the country in which they were immigrating from. However, an increasing phenomenon is — especially amongst high net worth individuals, who are Americans — seeking greener pastures outside of the United States and they are leaving the United States in record numbers. There are both political policies and circumstances that are occurring.

My clients have enough money to maintain their lifestyle, whatever that is, from the austere to the ostentatious. They have enough money to leave their children to go through college all the way through to being taken care of, and they have money beyond that. What are they going to control over and above this? One of the things I particularly found in the last few years, especially when there was a discussion about wealth tax was that it was the control of this money, and specifically, their ability to engage in strategic philanthropy. When the rhetoric amongst the Democrats changed from, “Let’s get money for good things,” to, “Let’s take money from bad people,” I saw a dramatic increase in the number of clients that were calling me.

Bob Zadek: That’s a very interesting distinction and I suspect many people who follow the political comings and goings of our country may not have focused on. The demonization of wealth just because it exists. We recall that AOC or somebody spoke in public that billionaires ought to be illegal. There was something inherently wrong with having that much money, however you may have acquired it. I think that’s the demonization of wealth that you are that you are alluding to.

You mentioned a wealth tax. Everybody knows about income taxes — that’s a tax on your earnings. That’s quite different in feel and in policy from a wealth tax, although often that distinction might be blurred. Help us understand the difference between the two and the effect that each might have on your clientele.

David Lesperance: I’m going to expand. Income tax is a tax on the current income that you make. Capital gains tax is when you purchase an asset, whether that’s a share or property or a business, and the value of the capital is increased, you have capital gains tax. A wealth tax says that whether you have assets which are increasing in value, stable, or dropping in value, we are just going to take a percentage of your assets annually off the table. One of the big things that has been a driver is the Democratic platform to increase capital gains tax from 23.5% up to the ordinary tax rate, which is 39%.

Well, if you are a Silicon Valley founder, or somebody else who has a major liquidity event and a capital gain, that’s quite a leap. That’s one of the things that has really been driving the threat of a wealth tax, which was not adopted by the platform. But the increase in capital gains to ordinary people is definitely one of the drivers, not only for clients to give themselves the insurance policy or the ability to leave, but actually clients who are packing the parachute and jumping out of the U.S. plane to get to more favorable destinations.

Democrat Wealth Taxes = No More Middle Class

Bob Zadek: The real point of the show is not a “how to do it kit” for high net worth individuals, although there certainly will be valuable information in this show, but rather that the middle class should care profoundly about the subject matter of this show. As high net worth individuals depart, and we have seen that happen at the state level, the same thing that David deals with on a global basis, we see happening in the United States as individuals change their residence from one state to another. There are profound negative effects on the country or the state which is losing high net worth individuals, so we are all affected.

David, tell us about what you have observed. It’s kind of obvious, but your insights are highly valuable to us. Tell us what the danger is to the state adopting a short-sighted “tax the rich” policy. What happens to those middle class people — most of the country — who are left behind as the high net worth individuals leave?

David Lesperance: The answer to this question was actually what drove me to my coauthor, who is a London School of Economics Professor Emeritus. We ended up writing the book The Flight of the Golden Geese: How the 1% Matter to the Other 99%. Now, the US revenue model is to an extraordinary extent dependent upon personal income. That is because there is no value added tax, which is prevalent in most other countries. There just isn’t a VAT. Therefore, the United States has an extraordinary dependence upon personal income for a large percent of the total revenue. Now, whether you think it’s fair or not, the fact remains that a progressive tax system revenue model is extraordinarily overly-dependent on a tiny number of taxpayers for 40% of that total personal tax revenue. You’re too reliant on a very small number of taxpayers to contribute a lion’s share of that.

Those golden geese are the ones that — because of globalization, because of mobility — are the least sticky. They can reproduce and maintain their business and personal lifestyle in a variety of places. If a tiny number of them leave, it has an extraordinarily asymmetric negative impact on your revenue. That is money that is not going to be there for the middle class for all the other functions that the US government spends its money on. As you say, let’s keep taxing the rich more and more and more, and you ignore how the rich feel about it.

At some point, they’re going to leave the US tax system. They will pay their bill on the way out the door for what they’ve owed up to that point. Not only are you not going to get the windfall of those additional taxes, but you’re going to lose a substantial tax that you were receiving annually from these people. So taxing the rich will produce a drop, and this is mathematically quite logical. The reality is there’s a record number of people leaving the United States.

Emmanuel Suez and Gabriel Zuhman, from both UC Berkeley and Stanford (they are protegees of Thomas Piketty, the French economist) wrote in The Wall Street Journal that it is very difficult to leave the United States so they just dismiss that as a possibility, but they acknowledge that the reason why wealth taxes in places like France failed was because taxpayers just said, “I’m going to move to another one of the 26 countries I could move to, as an EU country citizen.” Americans can’t do that, they argue.

Really? I’ve been helping Americans do that for over three decades, and record numbers of them are doing that. So if you are going to push a wealth tax, please be factually correct and don’t incorrectly state that the people that you are relying on to contribute this revenue and who you’ve been overly dependent upon for existing revenue sources can’t just pick up and leave because they can and they do.

Bob Zadek: One thing that’s really important for our listeners to bear in mind and promise never to forget, is that high net worth individuals, who both enjoy high income and accumulated high wealth assets that they own as opposed to earnings, give substantial portions of their money to charities and organizations that they favor. For sure, they pick the organizations, but they accomplish voluntarily, what we call in economics “wealth transfers.”

There are profound wealth transfers going on, but they are voluntary. So in fact, there is a continual transfer of wealth from high net worth individuals who have more than enough passed down to the charities, whatever they may be. We have very high net worth individuals such as Bill and Melinda Gates, who get a lot of publicity and have formed foundations and they give away buckets and buckets and buckets of money in the Gates Foundation case, for World Health. So that is nothing other than a wealth transfer. But it is voluntary. When we hear folks such as Elizabeth Warren and others who want to soak the rich because the rich have too much money.

Really, the fight is not about whether there should be a wealth transfer that’s going on, but it is who decides who gets the money, whether it is going to be the person who earned it or whether it’s going to be the governments where decisions are made through the political process, and not through a process of need or efficiency. So let’s bear in mind, this is not about whether high net worth individuals get to keep the money so they can live an even more opulent lifestyle, although for sure, there is a good deal of that. But well, beyond that, there are wealth transfers going on all the time.

Immigration and Taxation Advice from David Lesperance

Bob Zadek: Give us some examples of the kind of assignments you are given of a country or an individual. What are the circumstances of the typical client? What’s in your toolbox? How do you help them leave?

David Lesperance: I was once upgraded on a flight from Europe back to the United States. A gentleman sat next to me who was very nice and who had also been upgraded. I noticed he had a Timex watch on his wrist of about $70. Back in the day when I was a little more fit and doing things like the Escape from Alcatraz triathlon, I said, “Oh, I use that same watch.” He proceeded to tell me about how he loves this watch. Because he doesn’t need to deal with hotel alarms and things.

We got to talking and he seemed very passionate about strategic philanthropy. Nondescript gentlemen, dressed comfortably, cheap watch, etc. He said, “I would never pay for this flight. But if they’re going to upgrade me, I don’t have a problem with it.” Later on, and he took my card. He was kind of interested in what I did. Later on, he called me up he said, “Oh, I’m sorry, I think you must have grabbed a book when we were gathering all our stuff, and a family member gave it to me, can you please send it to me?” So I looked and I found the book and he gave me his address. I only knew him as Chuck. He was a fellow named Charles Feeney. Charles Feeney was one of the founders of the “Duty Free.” There’s a book called “The Billionaire Who Wasn’t.”

Charles Feeney, at a very early age, gave away all of his money, and then directed the spending of that money. In particular, because he was of Irish descent, he had an enormous impact on Ireland — a game changing impact — which if that money had gone into tax revenue would have been gone in half a day. This was somebody who decided that he would give through the Atlantic Philanthropies the last of his money. This was the inspiration for the Giving Pledge, which Warren Buffett and Bill Gates and Mark Zuckerberg and many others have signed on to, which is to volunteer to give away a large portion of their wealth. It’s interesting that that got a lot more support than the so called Buffett Rule, which was an increase in current taxation, because it was really talking about a control over strategic philanthropy.

My clients have no problem paying for services that they use or could have used but chose not to, and paying for some others. There is a limit. At some point, they say, “I’m going to look at this as charity.” Quite frankly, if you look coldly at government activities, and you want to deal with a particular social ill, let’s say early childhood education, it is not a terribly effective or efficient manner in which to deal with that societal ill, so they decide to really focus on that and really have a dramatic impact.

If you look at Bill and Melinda Gates, one couple had more impact on the eradication of malaria in a decade and a half than all the previous world governments had since they have discovered that mosquito was a vector for malaria 100 years before. So when clients call me, it is because they have a particular concern.

I use the analogy — and my apologies to your California listeners who may actually be experiencing this — it’s a bit like being in a wildfire zone.

That wildfire may be a threat to your strategic philanthropy. It may be a concern about the divisiveness of the current society or worries about civil unrest, or earthquakes or hurricanes. Whatever that is, it is unique for everybody. So if you’re facing a wildfire situation, or potential wildfire, logically, the first thing you do is engage in fire prevention, those are domestic solutions. If you’re worried, for example, about a wealth tax coming in, in California, you may move to Texas. If you’re worried about the gift and estate tax exemption dropping, you may do a gift before that does drop, you may do a state freeze. There are a number of different fire prevention techniques. What you also do is get fire insurance. And in the case of the United States, because it is unique amongst developed nations aside from Eritrea in taxing based on citizenship.

You need to have an alternative citizenship. The insurance is an alternative citizenship and an alternative residence. We also map out a fire escape plan. While I mentioned that there are record numbers of people who are using the insurance policy in the fire escape plan and leaving, I would say that for everyone that is actually leaving, ten other families are getting what we call a “backup plan” together. When you develop these types of plans, it has to not only make financial sense and deal with the concerns that you have, but it also has to be livable. I like using the analogy of it being sold at the boardroom table and at the breakfast table. One of the things is common: somebody will call me and they have just been sued or just been audited and they say, “Move me somewhere where there’s no lawyers and no taxes.”

I say, “No problem we’ll move you to Pitcairn Island where the bounty mutineers landed,” and I say, “Pack a gun.”


“Well, within six months you’re either going to want to kill yourself or your family’s going to want to kill you.”

It’s how we organize and arbitrage all the possibilities to have a controlled tax situation and have a lifestyle which is at least as good as you have right now, and quite frankly could be even better at a lower cost sufficient for you should you determine that the fire is getting a little closer such that it is viable for you to use your insurance policies and have a viable escape plan.

Common Motivations for Expatriating

Bob Zadek: How many of the individuals who consider this are making this move primarily as wealth preservation, and how many are making the move because of the political climate? It’s hard to imagine somebody leaving the United States because they don’t feel free enough. It’s hard to imagine a place on earth where one can feel more free, even though there may be in the long run an erosion of personal freedom here in the US, but it’s not that dramatic. Are there many people who will leave primarily for a more free political climate? And indeed, are there places that based upon your clientele’s calls to you, are more to their liking?

David Lesperance: Yeah. A lot of my clients have come to realize that they can vote. They can have freedoms to do various things in numerous countries in whatever is important to them, such as having freedom of speech, freedom, religion, mobility, property rights, and there are a number of countries which have that. A lot of clients want to choose a place that has a minimum impact on their life and a minimum negative impact, while having all of the qualities for lifestyle for myself and my family. Certainly, one of the big things that has come up, particularly over the last six or seven years, has been a concern across all sides of the aisle of having a backup option in case the domestic situation intensifies.

One of the interesting side effects of COVID is that people have discovered that they’re a little freer of location than they were before. If your child is going to Texas A&M, they can dial in just as easily from Toronto or Barcelona as they can from Austin. It’s that freedom of location that people are starting to say, “Where else could I produce this lifestyle? Where else could I continue to do what I need to do to make or to maintain my wealth?”

Understanding Governmental Policies in Relation to Golden Geese

Bob Zadek: Do you have any thought of how governments do not get it? What accounts for governments adopting a suicide pact that sends all the 1% is to some global gulch.

David Lesperance: Some countries do get it. Some countries have specifically designed policies that are attracted to bring in the golden geese. What tends to happen is they design policies to try to bring in foreign golden geese while they will put more pressure on their domestic golden geese because they’re hoping that life inertia will keep them from leaving. There’s a wonderful economist named Albert Hirschman, who wrote a book called “Exit, Voice, Loyalty.” If you don’t like the situation, you have three choices.

Exit, you can leave. Voice, you can lobby, you can talk to the manager and try to get change, or loyalty, you can just suck it up and stay there. If you wonder why all these wealthy people move to Switzerland, it is because Switzerland figured out long ago that if they attract wealthy people to Switzerland, they spend money in restaurants, they keep properties, they hire Swiss. They are also job creators, they bring in capital, they keep those industries, particularly the financial industry going.

What Switzerland did is said, “We are going to have something called a ‘lump sum,’ where you can live in Geneva, for example, which is a more developed, as opposed to one of the smaller amounts and cantons you will pay approximately 180,000 US tax a year, whether you make $1 or a billion that is how much you pay.”

Now, the marginal cost of having that taxpayer in Switzerland, is minimal. It’s not like they pave another mile worth of road or hire another policeman. But the benefit is substantial. What they’ve done is a lump sum. Now, if you’re a billionaire you’re spending $180,000 on accountants just to deal with tax compliance. If you are simply writing a check each year and it is predictable, you know exactly what it is. In the canton of Zurich, the leftist group got together about nine years ago and they passed a referendum so that Switzerland doesn’t have a lump sum anymore.

They passed it in Zurich. So Zurich doesn’t have the lump sum. All the wealthy people in Zurich just moved up the road to Zug. So Zurich suffered as a result. Well, now they’re talking about having another referendum to bring it back again so they can be within competition.

To say that the wealthiest don’t pay anything in taxes in the United States is incorrect. The other one that you constantly get trotted out is that Warren Buffett’s Secretary pays more tax than Warren Buffett. So I’m going to impose on your listeners one equation:

X x Y = Z.

X is taxable income, Y is rate, Z is dollars paid.

What you want to do, of course, is maximize your dollars paid. So let’s say Warren Buffett’s Secretary makes $100,000 a year and pays 40%. That will net $40,000 for the US coffers.

Warren Buffett may have paid $10 million in capital gain in a year. His rate is 23.5%. But that’s still $2.3 million dollars.

If you’re a government who is trying to maximize your revenue, would you rather have 40,000 or 2.3 million? And that’s the hard truth. What has resulted is now, because capital gains tax is unfair, we are going to increase the capital gains tax, which is the Democratic platform. I have a number of clients who will be expatriating, after January 1, and before the inauguration, for the sole purpose of avoiding paying tens of millions of dollars in capital gains taxes as a result of that policy. Not only will they not pay that additional capital gains, all of those people and their future tax revenue will no longer be in the US.

Overcoming Social Inertia

Bob Zadek: Governments try to be savvy about inertia knowing their tax policies are likely to chase people out, because often the people stay anyway simply because of inertia. And what caused me to smile when you mention that is, you always can tell if you were eavesdropping on my phone calls when I’m talking to another libertarian buddy, because somewhere along the line in that conversation, you would overhear me saying, “I know, I know. But the weather is great.” I live in a world of inertia. I am living in a state where, from a standpoint of the relationship between the citizen and the government, it makes no sense to live here.

I often observe that Gavin Newsom and his crowd up in Sacramento probably have the perfect tax rate, because they’re sucking every bit of marrow out of my bones, but yet, I’m still here, which means they must have nailed it exactly right. They are getting more than they deserve but yet I stay here. So I personally experience inertia all the time.

Now, David, can the Biden administration learn from what is happening? Is there anything you would tell Biden about the tax environment?

David Lesperance: I just finished listening to a podcast by the NYU marketing Professor Scott Galloway, who is very popular these days, and he just wrote a new book. He talks about accelerators and COVID being an accelerator. So for example, the movement of people from bricks and mortar to online purchasing and the resulting increase in Amazon’s activities and stock and percentage of total sales has dramatically increased because of COVID. The same COVID is also overcoming life inertia. New York City, possibly soon to be joined by San Francisco, has the highest combined tax rate of any location in North America, because they have a federal tax, a New York state tax, and a New York City surtax? When COVID hit, lots of people went to Palm Beach or went up to the Hamptons, and they stayed there. They discovered they overcame life inertia.

There’s not there still isn’t that migration back in. People have learned that there are other places. Canada’s looking very attractive. I have been bringing Americans to Canada as a tax haven for three decades. And everybody kind of shakes their head, but isn’t Canada high tax jurisdiction? Again, my equation X times Y equals Z. Canada does not have an estate tax. It doesn’t have a gift tax. The capital gains and income tax rates are generally higher, but California and certainly New York has already surpassed it. Through legal, pre-immigration tax planning, you can reduce or even eliminate the X. Well 0 times the 99% rate is still zero dollars paid. There are lots of different places with a combination of things. To an incoming Biden administration, I would say, “Be very careful about adding new taxes, because that may be the straw that breaks the camel’s back, which has all of these other ten families that have backup plans to leave.”

One of the big mistakes is that people say they want to be able to come back to the United States. That’s not a problem. In the 30 years and several hundred expatriations I have done, only twice if I had both a husband and a wife expatriate — and that had nothing to do with taxes, that was purely a personal choice. So it’s definitely one person and that person can come in. The problem is not coming in. The problem is for them to control themselves, so that they don’t spend too many days physically in the United States and reacquire the tax status. It’s almost like Homeland Security saying, “Come on in, and the IRS is behind them whispering, and we hope you stay too long.” So again, getting proper advice, having a plan that is livable for all the family members that need to live it, and knowing that you have got the comfort of the insurance. You hope for the best, but you plan for the worst.

Bob Zadek: Have you noticed any increase in calls from prospective new clients simply as a result of the election?

David Lesperance: The answer is I’ve never had as busy an amount as I’ve had this past month. Clients are definitely concerned. They’re concerned about the control of the Senate. They’re concerned about the future. From an administrative point of view, they now know who the President Elect is and Vice President elect are going to be, but they don’t know who is going to control the Senate. So clients, you don’t wait until your houses are on fire before you get insurance. That’s why clients are very busy calling me up.

Bob Zadek: How do our listeners follow your writings and your blogs?”

David Lesperance: If they go to that will be my web website. There’s a blog section there, they can get white papers, they can contact me if they want to speak. I will also be speaking at a presentation on the first weekend in December, not this upcoming week, but the following week, where we’ll be talking exactly about this.



-- • host of The Bob Zadek Show on 860AM – The Answer.

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