Monaco, Netherlands, and Tax Servitude

June 24, 2023 by Dan Mitchell @ International Liberty

Libertarians often make the claim that taxation is a form of robbery, and some of them (especially the anarcho-capitalists) even assert that it is a form of slavery.

Since I’m an economist, I stick to less flamboyant arguments about the adverse impact of high marginal tax rates and double taxation.

But, based on a controversy in the Netherlands, maybe the more radical libertarians have a point.

There are some people in that country who think a race car driver who left the Netherlands and now lives in Monaco has an obligation to surrender half his income to the Dutch government.

Here are some excerpts from a report published by a sports website.

 

Max Verstappen, ever since he turned 18 has been living in Monaco which is known to be a tax haven. Essentially, Max Verstappen has not paid any tax whatsoever to the Dutch government for his earnings which are estimated to be €200 million… a LinkedIn post by Rutger Bregman…accused Max Verstappen of stealing from his own country. In the post, he commented “People like Verstappen don’t work for their country. They only work for themselves.” …There is a solution to the accusation raised by Rutger. …Wouter Leenders and Vinzenz Zieseme…pointed out that the Dutch government do what the French government does to its uber-rich. The French Government…taxes French individuals living in Monaco since 1963. The problem with this arrangement is that there are 15 other Tax Havens in Europe that would happily favour the high-paid athletes.

Notice that Mr. Bregman is asserting that Verstappen has an obligation to work for somebody other than himself. Is that not – at least in part – the definition of slavery?

There’s actually a serious tax issue in this controversy. Bregman, Leenders, and Zieseme presumably think that the Netherlands should have a “worldwide” tax system, which means the Dutch government would tax people like Verstappen even if they permanently reside someplace else.

There is a major country that uses that approach, and I’m embarrassed to admit it’s the United States.

Fortunately, I don’t think Europe will copy that mistake.

P.S. Monaco is a great refuge for successful people. But, as noted the excerpt above, not if you’re French (and you can read the history of that by clicking here). Successful French people have to move to places such as Belgium (no capital gains tax) or Switzerland (low overall taxes).