A Tax-Credit Approach to Addressing Brain Drain

12 Pages Posted:  

Matthew J. Lister

Deakin University School of Law

Date Written: August 6, 2018

Abstract

This paper proposes a novel use of tax policy to address one of the most pressing issues arising from economic globalization and international migration, that of “brain drain” – in particular, the migration of certain skilled and highly trained or educated professionals from less and least developed countries to wealthy “western” countries. This problem is perhaps most pressing in relation to doctors, nurses, and other medical professionals, but exists also for teachers, lawyers, economists, engineers, and other highly skilled or trained professionals. While there have been other proposals in the past to use tax policy to address brain drain (most famously versions of the so-called “Bhagwati Tax”, a form of exit tax), in this paper I provide an account of and justification for using tax credits, modeled loosely on the foreign tax credits U.S. citizens receive in certain situations for taxes paid in other countries. My proposal avoids several of the pitfalls of other methods of using tax policy to ameliorate the harms of brain drain, as it does not subject people from the developing world to potentially onerous double taxation, and does not depend on sophisticated tax collection capabilities within developing countries, capabilities which are often lacking. Additionally, my proposal also leads to fewer morally problematic restrictions on the liberty of citizens of less and least developed countries than do non-taxed based alternative proposals, such as temporary bans on migration. While the proposal cannot hope to completely solve the problems that arise in relation to brain drain – no approach can do this – it does provide a straightforward way to ameliorate the problems that arise from it without placing significant financial or liberty burdens on already less advantaged people from the developing world.

Keywords: brain drain, tax policy, foreign tax credits, immigration, international migration, Bhagwati Tax, international development, economic globalization, international labor migration

JEL Classification: F22, F24, F16, F02, F35, F63, F66, J15, J24, J61, K31, K33, K34, K37

Suggested Citation

Lister, Matthew J., A Tax-Credit Approach to Addressing Brain Drain (August 6, 2018). St. Louis University Law Journal, Vol. 62, No. 1, 2017. Available at SSRN: https://ssrn.com/abstract=3226855

Matthew J. Lister (Contact Author)

Deakin University School of Law ( email )

221 Burwood Highway
Building BC, 6th Floor
Burwood, Victoria 3125
Australia

HOME PAGE: http://www.deakin.edu.au/law

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