The brain drain myth
In an attempt to curry favor with the voters, local politicians often make outlandish claims. They worry, for instance, over the CNMI brain drain. They claim that recent college graduates may not be properly motivated to return to their home islands after studying in the United States. They make this claim despite the overwhelming evidence to the contrary.
Indeed, no study has ever been conducted to support the brain drain assertion. The local politicians merely make an unsubstantiated claim and trust that everyone will believe them.
The Feds make the same false claim as well. They say that local workers are deprived of good working opportunities. They further contend that the only possible remedy is to kill the free enterprise system in the Marianas, by artificially raising wages and drastically curtailing the influx of productive foreign labor.
In their own way, local politicians advance the same solutions. Impose a three-year foreign worker limit, they insist. Impose a $100,000 security deposit. Over-regulate. Impose protectionism.
Whether we are dealing with local labor moratoriums or federalization itself, it essentially amounts to the same principal: kill capitalism in the Northern Marianas. Federalization, however, would kill it even faster, with more economic devastation.
And yet it is precisely our relatively free enterprise system that attracts so many returning college graduates. Why work and live in the United States? All things considered, it makes little sense.
Consider the recent college graduate’s position. The average fresh college graduate probably earns $35,000 in the United States, perhaps even less.
Right away Uncle Sam claims 28 percent of that in federal income taxes. Then add state tax, perhaps another 8 percent. Add Social Security taxes. Then add sales taxes for every purchase.
Suppose the recently employed college graduate saves some of his income in a bank account. That, too, is taxed–along with dividend and capital gains income.
Suppose our college graduate decides to buy a house for his family. Now add property taxes.
Why would any sensible CNMI college graduate want to be stuck paying outrageous American taxes?
All things considered, it makes far more sense for recent CNMI college graduates to return home rather than work in the tax-hungry United States.
Taxes in the United States cannot easily be changed. The United States is a huge country, with hundreds of Congressmen.
The CNMI is a small territory–a territory which should have the flexibility to institute real, meaningful tax reform. We must therefore keep Saipan free. We must make it a tax haven once again, in part by repealing the inheritance tax and experimenting with a liberating flat tax.
At the same time, we must resist a Federal take over to the bitter end. For once they have control of immigration, labor and wages believe me, Federal taxes–and the notorious IRS–will surely follow.
And if that ever happens, then we will really have a wholesale economic exodus on our hands (far beyond a mere brain drain: smart and dumb alike will flee for dear life).
