As goes tax policies of a nation, so goes the survival of the civilization.BC Law Prof Ray Madoff explains how and why the US tax system has created tremendous inequality and "aristocracy". Bottom line: "Salaries are for suckers"This video is worth watching!www.nytimes.com/2026/04/17/o…
— John Richardson (@expatriationlaw.bsky.social) 2026-04-19T11:57:05.254Z
Thanks to long time Brock contributor Tim Smyth who introduced me to this fantastic article/podcast.
Ray Madoff is a Boston College law professor who is the author of a number of books including:
Second Estate – How The Tax Code Made An American Aristocracy
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Why this interview is important …
Americans abroad are acutely aware of the unfairness, arbitrariness and weaponization of the U.S. tax system. There are multiple layers of unfairness. The institutional layers of unfairness includes (but are not limited to):
First level 0f unfairness – defining tax residency in terms of the “circumstances of birth” (citizenship) rather than the “circumstances of life” (where people actually live).
The unfairness includes taxation of people based on “status” (citizenship, immigration status) without regard to whether people live in the United States. The “status” based unfairness is discussed only by those impacted by it.
Second level of unfairness – taxing different forms of income and assets differently
This is where this interview with Ray Madoff really shines! At the risk of oversimplification, Professor Madoff explains:
– how the tax system discriminates against people who receive their income in salary as opposed to investments.
Question:
Why should income from capital gains be taxed at a lower rate than income from work?
The U.S. tax system appears to operate in a way that exempts the super wealthy from the same levels of taxation that are experienced by wage/salary earners.
I highly recommend this interview. It is the most educational hour that I have experienced in a very long time. Understanding this interview will equip you with a better vocabulary and understanding to discuss tax policy.
At one point Professor Madoff draws a direct comparison between the Canadian and U.S. tax systems. There is a brief exchange about citizenship taxation and renunciation of U.S. citizenship.
An incredibly rich discussion …
Listen to this podcast! I promise you will benefit.
The interview on YouTube:
Links to the original New York Times article:
https://www.nytimes.com/2026/04/17/opinion/ezra-klein-podcast-ray-madoff.html
Mentioning the tax avoidance that the ultra-wealthy often engage in together with the issues of citizenship-based taxation brings up an issue that arises with tax reform designed to make the rich pay their fair share: How to design it in a way that doesn’t harm lower or middle class people. For example, it’s generally not “ordinary Americans” moving abroad that the majority of the American public have an issue with; rather it’s the wealthy who move (or in many cases just ostensibly change their legal residency) abroad to low or no income tax countries to shirk their responsibilities – yet elements of the tax code designed to stop the latter group often entangle members of the former group along with accidentals (as is mentioned frequently in this blog).
I think what needs to be done is to write into the US tax code a threshold (at the top of what would be considered upper middle class accounting for both assets and income, indexed to inflation so there is no “bracket creep”) with provisions designed to make the rich pay a fair share taking effect only above that limit. For example, below that there would be no AMT, “personal use property” including one’s primary residence would not be subject to capital gains tax, RBT with no presumption of tax avoidance if moving abroad and becoming a full tax resident of another country, among other provisions.
@Kelly
Does your suggestion for the taxation of American citizens include a presumption of residence based taxation with citizenship based taxation only above a certain income/asset level? Am I understanding you correctly?
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As a general principle I think that tax reform should NOT be about how to tax the rich more, but rather:
What should be the design principles and rules that result in a (tolerably) “fair” tax system?
I am increasingly of the view that most Americans prefer an unfair tax system because the unfairness creates opportunities for a lower tax burden. If I were to describe the U.S. tax system today, I think it would say:
The USA has a tax system that rewards those who who do NOT receive their income from wages and self employment, but live off investment income. So, the goal is to have enough wealth so that you can avoid the punishing taxation associated having to work for a living.