Skip to comments.Obama Policies Killed 59,757 …and Counting
Posted on 08/09/2012 9:41:00 AM PDT by Kaslin
French president Francois Hollande wants to set the top tax rate in France at 75%, for those who make over €1,000,000 a year.
As a result "Les Riches" Have Tax Indigestion and are looking to move outside France.
Were getting a lot of calls from high earners who are asking whether they should get out of France, said Mr. Grandil, a partner at Altexis, which specializes in tax matters for corporations and the wealthy. Even young, dynamic people pulling in 200,000 euros are wondering whether to remain in a country where making money is not considered a good thing.
Because there are relatively few people in France whose income would incur such a tax perhaps no more than 30,000 in a country of 65 million the gains might contribute but a small fraction of the 33 billion euros in new revenue the government wants to raise next year to help balance the budget.
There is no question Mr. Hollande is under fiscal pressure. He has pledged to reduce Frances budget deficit, currently 4.5 percent of the nations gross domestic product, to 3 percent by next year, to meet euro zone rules.
The matter of how best to hit that target, though, is as much a political question as a fiscal one. Mr. Hollande was elected in May on a wave of resentment against les riches company executives, bankers, sports stars and celebrities whose paychecks tend to be seen as scandalous in a country where the growing divide between rich and poor touches a cultural nerve whose roots predate Robespierre.
Half the nations households earn less than 19,000 euros a year; only about 10 percent of households earn more than 60,000 euros annually, according to the French statistics agency, Insee.
There is currently no plan to change the tax rates for most people, which is 14 percent for the poorest and 30 percent for the next rung. For higher earners people with incomes above 70,830 euros a year the tax rate will soon rise to 44 percent, up from 41, in a change that was already set before Mr. Hollandes election.
Taxes are high in France for a reason: they pay for one of Europes most generous social welfare systems and a large government. As Mr. Hollande has described it, the tax plan is about justice, and sending out a signal, a message of social cohesion.
France has a 33 percent corporate tax rate the euro zones second-highest, after Maltas 35 percent. That contrasts with the 12.5 percent rate in Ireland, which has deliberately kept a lid on corporate taxes as a lure to businesses.
It is a ridiculous proposal, but its great for us, said Jean Dekerchove, the manager of Immobilièr Le Lion, a high-end real estate agency based in Brussels. Calls to his office have picked up in recent months, he said, as wealthy French citizens look to invest or simply move across the border amid worries about the latest tax.
Its a huge loss for France because people and businesses come to Belgium and bring their wealth with them, Mr. Dekerchove said. But were thrilled because they create jobs, they buy houses and spend money and its our economy that profits. Essential Math
The New York Times estimates that fewer than 30,000 make more than 1 million euros.
However, Sophie Pedder, writing for The Economist came up with a much lower number in an NPR interview.
"Probably no more than about 3,000 French households will be affected by this. But that's an absolutely tiny fraction of the whole. So, once you start looking at numbers like that, you realize how this is very much a symbolic gesture," said Pedder.
That's a big difference. But whatever the number is, the government will collect far less than it thinks.
The current top tax rate is 41%. It's a big jump to 75%. And the more someone makes over €1,000,000 a year, the bigger the incentive to move.
Tax Rate Comparison
According to Pedder the UK lowered its top tax rate to 45% from 50%. Sweden has a top rate of 57%, and Belgium at 55% so "France sticks out really like a sore thumb on this one."
I strongly suggest this move by France will backfire. When it does, Hollande will probably seek to raise taxes on the next rung lower to make up for it.
Government Spending Over Half of French GDP
In Quick Facts on France, Heritage says "Government spending has increased to a level equivalent to 55 percent of total domestic output. The deficit remains more than 6 percent of GDP, pushing public debt up to more than 80 percent of GDP."
In a recent panel discussion in Spain, Paul Krugman said he would start to worry when government spending is over 50% of GDP.
France is there now, and the US headed there unless we rein in the deficit, which Krugman does not want to do.
Its insane our corperate tax rate. Followed by allowing the EPA to have as much power as it does. c.r.a.z.y!
What does this headline have to do with this article?
(Not that I doubt the headline...)
Sponsoring FReepers are contributing
$10 Each time a New Monthly Donor signs up!
Get more bang for your FR buck!
Click Here To Sign Up Now!
I was wondering the same thing.