French Socialists are Celebrating the 75% Tax on the Wealthy
August 8, 2012 |
Francois Hollande, a French socialist, won an election by campaigning on taxing the rich at the rate of 75%. Shortly after Hollande’s victory over Sarkozy, a pathetic excuse for a conservative, the French then voted to give the socialists control of the French parliament. Socialists now have 100% control of France.
Holland did indeed deliver on his promise. France has the same fiscal problems of every other failing and soon to be bankrupt western nation, namely a lack of money to fund its gargantuan entitlement promises. While the French are presently euphoric over the prospects of soaking the rich, the media of all political stripes has taken notice. Jonathan Turley, who is ideologically some brand of a libertarian statist, even managed to cringe.
Various news organizations have been reporting an exodus of the superrich from France — often buying homes in England or surrounding countries to avoid the expected 75 percent tax rate proposed by the Socialist government of President François Hollande. While the rate would apply only to those making one million euros a year or more, I view it as a mistake. I admit that I tend to have great reservations about heavy tax hikes during economic crisis. We have debated the value and potential harm of such hikes on this blog. However, a 75% rate is in my view insane. As rational actors, top earners are likely to simply leave the country as they are doing. Hollande came into office on a wave of sentiment to soak “Les riches” and Hollande himself proclaimed “I don’t like the rich.” It is a bit too Robespierrean for my tastes as an economic policy.
It is highly probable that the socialist celebrations will be extremely short lived. The French economy is struggling and cannot produce sufficient taxable wealth to sustain the state and its entitlements, which, of course, translates to a deepening of French financial woes. Meanwhile, the wealthy will do what they always do – move to a tax friendlier abode. Because the wealthy have an abundance of both means and mobility, they can’t be chained to a nation state for purposes of outright expropriation and wealth confiscation.
France’s highest earners are preparing to leave the country if Francois Hollande hikes up the top rate of tax.
One Paris law firm says it has been inundated with calls from wealthy businessmen asking if they should leave France if the socilaist President Francois goes ahead with his promise to introduce a 75 per cent tax rate on income above one million euros….
‘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.‘
High taxes have a very predictable result: capital flight and what is known as ‘brain drain’. The rich and the smart just start packing and head for more freedom oriented shores.
This ‘tax the rich’ scheme will not end well for France and will only make a bad situation a whole lot worse by intensifying economic misery.
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