is capital flight worth being concerned about?

We're taught that "capital flight" is the real fear of raising tax on rich people but I was recently told that so long as you've got a closed currency border (as in, here in Australia we're the only ones who use Australian dollars) that if a billionaire were to send all of their money overseas, what they have to do first is send the money to a bank in exchange for the foreign currency and ultimately the money doesn't go that far, it just ends up in the bank and it's not a big problem for the economy. Do you see truth to that claim? What do you think of capital flight overall? I use the old top marginal tax rate of 92% in the US as a debating point a lot of the time but I feel like I could use more ammo on this.

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  • carl dillard
    commented 2017-03-09 12:39:31 -0500
    I am very interested in this question, too. It is probably the number one fear among non-experts (which include myself) about raising taxes on wealthy people. Deflating this myth would set a lot of peopleĀ“s minds at ease, and allow us to get work on those taxes.
  • Josh McGee
    published this page in Ask Prof. Wolff 2017-03-08 04:17:38 -0500