Money Walks in China
As the IRS data makes clear, wealth and income goes where it’s welcome, with over $2 trillion in total income migration in the United States over the last 18 years. Of course, tax-related migration is not only a US phenomenon. Internationally, money walks to where it is most welcomed in terms of low taxes and the protection of investor rights. The latest evidence of tax migration comes from China, where the affluent are leaving in droves and taking their money with them. According to the Boston Consulting Group, wealthy Chinese now have $450 billion stashed in offshore investments. BCG expects this number to double in the next three years as more and more Chinese seek security for their assets.
A study by the Bank of China also found that more than half of China’s millionaires are considering moving overseas or have already taken steps to move, with most moving to protect their wealth, their health and their families. Chinese regulations prohibit moving more than $50,000 per year out of the country, but many wealthy Chinese are finding ways around these restrictions. Because so much of China’s wealth is leaving the country illegally, the official holdings of Chinese millionaires abroad may be understated. For example, Chinese buyers purchased more than $8 billion worth of real estate in the United States in the past twelve months, according to the National Association of Realtors.
The migration of wealthy Chinese is yet another nail in the coffin of tax-migration deniers.