Talent vs. Taxes

America's last hope?

It’s sad to see the twilight of American progress, as our government continues its slide towards oligarchy and journalism devolves into regurgitating press releases to sell advertising. This reality leaves me wondering: What remains that might help the country change course? Two things come to mind: Firstly, the tried and true power of the people - most progress in America has been the result of devoted organizers inspiring widespread civic action. Secondly, economics, or more specifically, talent. The latter idea is new to me, but offers some promise that maybe change could happen before things get so bad that people resort to the former - unfortunately, while Europeans will protest at what seems to us Americans as the drop of a hat, lately it takes some pretty awful things for Americans to protest en mass. So, ever hopeful (while also preparing for the worst), I wonder if talent might be one of the remaining tools for progress.

Originally, I wrote this post using the word ‘democracy’ instead of ‘progress.’ After thinking about it, I reached the uncomfortable conclusion that my argument might not be so much about democracy as about social values. That said, I think most Americans agree on wanting a high quality of life, the disagreement is more about how we go about getting there. I believe the regression politics of the party that is about to return to power will fail in achieving any aims of improving quality of life. I might be wrong. My argument in this post resorts to economic and rather undemocratic (albeit legal) means to achieve what I believe are democratic outcomes (making America a great place to live) that people across the political divide desire.

By talent, I am talking about highly-skilled workers. I used to be one before I started writing, perhaps one day I will be one again. Of course, I believe that while not lucrative, writing still adds value to society. But my point is, the engineers, scientists, and other “smart people doing the work” at companies based in America have tremendous power - companies can’t survive without them and America can’t survive without its companies. Of course they are also not the majority of Americans, which is what makes my argument potentially undemocratic.

The companies we perceive as American, have really amassed such global power and presence that the only thing which makes them American is they choose to base their headquarters in the US. I’m talking about folks like Apple, Amazon, Microsoft, Meta (Facebook), Alphabet (Google), nVidia and other mega-cap multinational corporations. Why do they call America home? Primarily for the tax advantages, but also because of the ability to attract and retain talent here.

With the old administration that previously cut corporate and individual taxes returning to power, it seems likely more tax cuts are on the way. But what good are tax advantages if you can’t attract the talent required to build the products that generate the taxable revenue? I wonder, if America becomes a less attractive place to live for top talent, will companies start to consider growing in other countries?

Now, this theory of mine is based on the assertion that America is becoming a less attractive place to live. While top talent command top salaries, is it enough money to offset living in crime-ridden cities overrun by people suffering from addiction and falling into disrepair? Not to mention the lack of public infrastructure. Slow, unsafe and unreliable transit leaves the wealthy with 1+ hour commutes in their $80,000 sedans (plus financing, insurance, maintenance, fuel and parking costs). The worst healthcare outcomes in the developed world at the highest prices. Failing public education systems for their children and no public child care or early education - plus increasingly expensive higher education. The cost of housing, whether renting or owning, combined with everything else leaves high earners paying relatively low taxes but still living the HINRY (High Income Not Rich Yet) lifestyle.

If earning less and paying higher taxes comes with the benefit of better public infrastructure (transit, health care, education, safety, public spaces, etc), would the net result be a higher quality of life? Perhaps not for everyone, it certainly depends on individual values and perception of quality of life. However, I not only suspect, but have begun to see my hypothesis proving true with many talented Americans I have worked with in the past moving abroad.

Don’t forget that talented people come in all shapes and sizes, skin colors, genders, religion and sexualities. Having a xenophobic government that threatens practically everyone who isn’t a straight white Christian male has real consequences when the reality is top talent is far from homogenous.

Talented folks don’t have to wait for corporations to decide to leave the US, it’s actually their choice to leave (or not come to) the US that could inspire corporations to take relocation more seriously. Other countries offering more competitive corporate tax rates might help grease the wheels as well.

Corporations used to see America as a win-win with its low taxes and great places to live, but as the latter has fallen they must now ask themselves how far they are willing to go for low taxes - or how much will low taxes matter if they can’t attract top talent to build profitable products?

I’m not saying other countries are perfect, they all have problems - but in my experience there are a lot of countries with a higher quality of life than the United States. If you are a skilled American worker, know that you have options. Not only in the Canada, UK, Ireland, Australia and New Zealand anglophone world, but in so many other countries (especially in Europe and Asia) where multinational businesses have adopted English as the workplace language. The salaries might be lower and taxes higher, but if you look at the overall cost and quality of living, you might find a move worth considering.

Then again, maybe taking to the streets and protesting social injustices, declining quality of life and failed public policy is easier than uprooting and moving abroad. In any case, there are a lot of reasons to be hopeful that progress could return to America.