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The Swiss offer an interesting "choose your own tax" option that could be a model for other nations in the not-to-distant future.
You can take up residence in Switzerland (if you are a high net worth individual) by negotiating your own lump-sum tax rate. This is a very attractive option for wealthy, high-income people,
as they can know, with absolute certainty, what their tax bill is, and more importantly, know that it is NOT related to their income in any particular year - ie not a percentage of their income.
The Swiss offer residency status to retired foreigners in return for a negotiated lump sum annual amount. This varies according to which Canton you are dealing with. The larger ones will charge
you more - the smaller ones less. But to give you some idea, one of Switzerland's smaller Cantons offers an attractive tax deal of around $45,000 per year.
Now, if you are only earning $50,000 PA, then this is hardly a good deal. But imagine you're worth $1 million a year - then an effective tax rate of under 5% is certainly attractive!
In fact, even if you were earning "only" $500,000 - your tax rate would only be 10%. Of course, this strategy is only an option for the very wealthy,
and the retired at this stage. But it does show what is possible with a bit of lateral thinking. With the increased pressure on domestic tax revenues - caused by
the growth and awareness of offshore strategies, governments are going to have to make some hard choices. They can either decide to get "tough" on those they believe owe tax - and increase the
harshness of their tax regimes (thereby causing more of their citizens to become tax exiles), or they can get smart and devise ways of holding on to their productive people. And one such way
would be to come up with "fixed" price deals - where "desirable" people could negotiate their own lump-sum amount - in return for the services of that particular government.
For mark my words, we are going to see increasing tax competition among nations - as they wake up to the fact that they need to provide a "tax-attractive" environment for productive people
(people they cannot afford to do without). And one such strategy could very well be modelled on the Swiss idea. So, instead of penalizing those who work hard by taxing them more, they could
negotiate a fixed tax bill - to be paid annually, regardless of what such a person was earning. This would also be an eminently just system - as it would provide
for a voluntary contract between a sovereign individual and a sovereign territory - based on mutual requirements. You would in effect be paying for services rendered - and no more!
I would imagine that the first countries to offer such a deal would be smaller nations trying to attract productive people. It would be a sort of de-facto citizenship - or more correctly,
a permanent residency by virtue of contract. The other advantage of such a residency contract is that it would automatically remove you from residency/tax obligations in other countries - by provid- ing the proof of residency sometimes required.
The dollar value of such contracts could vary widely, but I would expect many countries to offer deals considerably cheaper than the Swiss one!
In the end, such an idea more correctly reflects the true "value" of what a particular country may offer - in the way of infrastruc- ture, health and education services, personal safety, cultural
pursuits, natural environment etc. And by paying a "lump" sum, the true cost of such residency is out in the open, not hidden in a multitude of other taxes.
In this way, countries would compete for residents, as companies compete for customers. Bureaucratic lethargy would give way to "customer" service. Now that's a novel idea!
The main point is that there many more constructive ways for states to maintain a healthy, dynamic population - without the coercion and bullying tactics we are all so used to - IF we can introduce competition into the "nation" supermarket.
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