If this passes
PARIS — The call to Vincent Grandil’s Paris law firm began like many others that have rolled in recently. On the line was the well-paid chief executive of one of France’s most profitable companies, and he was feeling nervous.
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President François Hollande is vowing to impose a 75 percent tax on the portion of anyone’s income above a million euros ($1.24 million) a year. “Should I be preparing to leave the country?” the executive asked Mr. Grandil.
The lawyer’s counsel: Wait and see. For now, at least.
“We’re 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.”
A chill is wafting over France’s business class as Mr. Hollande, the country’s first Socialist president since François Mitterrand in the 1980s, presses a manifesto of patriotism to “pay extra tax to get the country back on its feet again.” The 75 percent tax proposal, which Parliament plans to take up in September, is ostensibly aimed at bolstering French finances as Europe’s long-running debt crisis intensifies.
But 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.
The French finance ministry did not respond to requests for an estimate of the revenue the tax might raise. Though the amount would be low, some analysts note that a tax hit on the rich would provide political cover for painful cuts Mr. Hollande may need to make next year in social and welfare programs that are likely to be far less popular with the rank and file.
In that regard, the tax could have enormous symbolic value as a blow for egalité, coming from a new president who has proclaimed, “I don’t like the rich.”
“French people have an uncomfortable relationship with money,” Mr. Grandil said. “Here, someone who is a self-made man, creating jobs and ending up as a millionaire, is viewed with suspicion. This is big cultural difference between France and the United States.”
Many companies are studying contingency plans to move high-paid executives outside of France, according to consultants, lawyers, accountants and real estate agents — who are highly protective of their clients and decline to identify them by name. They say some executives and wealthy people have already packed up for destinations like Britain, Belgium, Switzerland and the United States, taking their taxable income with them.
They also know of companies — start-ups and multinationals alike — that are delaying plans to invest in France or to move employees or new hires here.
Whether many wealthy residents will actually leave and companies will change their plans, of course, remains to be seen. Some of the criticism could be political posturing, aimed at trying to dissuade the government from going through with the planned tax increase.
But some wealthy people left after Mr. Mitterrand raised taxes in the 1980s. And more recently, the former Victoria’s Secret model Laetetia Casta, the restaurateur Alain Ducasse and the singer Johnny Hallyday caused a stir by moving to countries just across the border to escape the French treasury’s heavy hand.
There is no question Mr. Hollande is under fiscal pressure. He has pledged to reduce France’s budget deficit, currently 4.5 percent of the nation’s 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 nation’s 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. Hollande’s election.
A tax accountant in Paris with many wealthy clients, Steve Horton, has calculated that a two-parent, two-child household with taxable annual income of a bit more than 2.22 million euros ($2.75 million) now has after-tax take-home pay of about 1.1 million euros ($1.35 million) under France’s current tax system.
That household would end up with 780,000 euros, or $966,000, if the Hollande tax took effect, Mr. Horton says. (The same family, with comparable income in Manhattan, would take home $1.55 million, the dollar equivalent of 1.25 million euros, after paying federal, state and city income taxes, he calculated.)
Taxes are high in France for a reason: they pay for one of Europe’s 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.”
That struck a chord with voters angry about the wealth divide. And it is supported by some economists, including Thomas Piketty, a professor at the Paris School of Economics, who has conducted studies indicating that high earners will not work less hard if taxed more. But some say France could send out the wrong signal.
“People have an acceptable amount of taxes they are willing to pay,” said Mr. Horton, the accountant, “and if it goes above that, they will move somewhere that’s more reasonable.”
“The thing French politicians don’t seem to understand or care about is that when you tax away two-thirds of someone’s earnings to appeal to voters, productive people who can enrich businesses and the economy won’t come — or they will just leave,” said Diane Segalen, a corporate headhunter.
She said she had been close to sealing a deal for a seasoned executive in London to join one of France’s biggest companies earlier this year, when Mr. Hollande made his 75 percent vow.
“When the guy heard that, he said, ‘I’m not coming,’ and withdrew from the process,” said Mrs. Segalen, the head of the Segalen et Associés, a consulting firm.
For Mrs. Segalen, the proposal is the latest red flag in a country that has long labored under the image of being a difficult place to do business. France has a 33 percent corporate tax rate — the euro zone’s second-highest, after Malta’s 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 it’s 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.
“It’s a huge loss for France because people and businesses come to Belgium and bring their wealth with them,” Mr. Dekerchove said. “But we’re thrilled because they create jobs, they buy houses and spend money — and it’s our economy that profits.”
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on Aug. 7, 2012 at 9:19 PM
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by
on Aug. 8, 2012 at 11:13 PM
Those who make a shit ton of money, what difference does it make to pay more in taxes? They already have way more than they need. Way way more. All I can chalk that up to is greed. Meanwhile, they keep the money and you have people on American streets who are starving. And no, it has nothing to do with lazyness. Those who are uber rich were born into that world. Very few of us ever make it that far up the ladder through working and earning money. It's greed, plain and simple.
Quoting Raintree:If I made so much money that it wasn't really noticeable- no.
And I'm pretty sure it isn't quite this simple, lol. Marginal tax rate.
Quoting lylalane7275:That's great. Would you be okay with giving 75 cents of every dollar you earn to the government?
Quoting Raintree:One of my first cousins lives in France with her family. They're very wealthy. They aren't leaving anytime soon.
Quoting lylalane7275:I would really like to know who here would be willing to give the government 75 cents of every dollar they earn? This is a very slippery slope and the rich are leaving France. That could happen here as well and if the rich leave, the middle class will have to take up the slack. Is that okay with everyone?
by
Bronze Member
on Aug. 8, 2012 at 11:14 PM
I adore this:
Quoting Raintree:
I loves him.
Did you ever see him do his thing on I Love Lucy? Classic.
Quoting Della529:
It is interesting that TEF pointed this out in a song.
Quoting mehamil1:
Amazing how this song is still relatable to today. Only now it's credit card debt, student loan debt, and mortgage debt to various banks.
Quoting Della529:
by
Silver Member
on Aug. 8, 2012 at 11:23 PM
Lucy being the vamp. Hahhahahaaaa.....
Quoting Della529:I adore this:
Quoting Raintree:
I loves him.
Did you ever see him do his thing on I Love Lucy? Classic.
Quoting Della529:
It is interesting that TEF pointed this out in a song.
Quoting mehamil1:
Amazing how this song is still relatable to today. Only now it's credit card debt, student loan debt, and mortgage debt to various banks.
Quoting Della529:
by
Gold Member
on Aug. 9, 2012 at 6:19 AM
Quoting mehamil1:
Those who make a shit ton of money, what difference does it make to pay more in taxes? They already have way more than they need. Way way more. All I can chalk that up to is greed. Meanwhile, they keep the money and you have people on American streets who are starving. And no, it has nothing to do with lazyness. Those who are uber rich were born into that world. Very few of us ever make it that far up the ladder through working and earning money. It's greed, plain and simple.
I think you assume that governments distribute charity more effectively and efficiently than private individuals and foundations. Don't forget that many of the people who have developed the skillful ability to grow investments would not want to see that wasted through corrupted bureacracy. Wealthy people who set up their own foundations are evidence of this, conservative AND liberal ones.
The most pressing social issue today is the economy
by
Platinum Member
on Aug. 9, 2012 at 6:30 AM
Here is a good overview.
http://www.fee.org/articles/great-myths-of-the-great-depression/
However as I always do, I recommend reading the book The Forgotten Man. It is the most indepth study of the depression ever written.
And no I don't have a problem with fees, however they go to the transaction provider, not the bank or the government.
Quoting Della529:I'd appreciate it if you would write in a less condescending tone.
What is the problem with showing the rates?
Do you think I don't realize there are many factors that were in play during those years, including war time? When you have more time, please come back and add. I'd enjoy your take on the fluctuations.
A tax on writing checks? Please provide a source as I'm not familiar with this. Do you have a problem with the banks "FEES" (IE. ATM transactions, account fees, etc)? Those hotshots have been manipulating government policies through bought politicians for a long time.
What rise before the crash of '29? 1918?
Here's another chart of the presidents in basically this same time frame.
28. Woodrow Wilson (1856-1924) Democrat 1913-1921 Thomas Marshall 29. Warren Harding (1865-1923) Republican 1921-1923 Calvin Coolidge 30. Calvin Coolidge (1872-1933) Republican 1923-1929 Charles Dawes 31. Herbert C. Hoover (1874-1964) Republican 1929-1933 Charles Curtis 32. Franklin Delano Roosevelt (1882-1945) Democrat 1933-1945 John Garner, Henry Wallace, Harry S. Truman 33. Harry S Truman (1884-1972) Democrat 1945-1953 Alben Barkley 34. Dwight David Eisenhower (1890-1969) Republican 1953-1961 Richard Milhous Nixon 35. John Fitzgerald Kennedy (1917-1963) Democrat 1961-1963 Lyndon Johnson 36. Lyndon Baines Johnson (1908-1973) Democrat 1963-1969 Hubert Humphrey 37. Richard Milhous Nixon (1913-1994) Republican 1969-1974 Spiro Agnew, Gerald R. Ford 38. Gerald R. Ford (1913- 2006) Republican 1974-1977 Nelson Rockefeller 39. James (Jimmy) Earl Carter, Jr. (1924- ) Democrat 1977-1981 Walter Mondale 40. Ronald Wilson Reagan (1911- 2004) Republican 1981-1989 George H. W. Bush 41. George H. W. Bush (1924- ) Republican 1989-1993 James Danforth (Dan) Quayle 42. William (Bill) Jefferson Clinton (1946- ) Democrat 1993-2001 Al Gore 43. George W. Bush (1946- ) Republican 2001-2009 Richard Cheney 44. Barack Obama (1961- ) Democrat 2009- Joseph Biden Quoting Carpy:
What exactly are you attempting to prove by showing the rates? There is so much in play besides the rates, that makes you look foolish. Hoovers economy engineering. FDR's failed experiments, soaring debt, and so much more that I don't have time to get into right now. Insane taxes like, such as a tax on writing checks of all things, which of course caused a run on banks. Notice the rise in the top rate right BEFORE the '29 crash?
Quoting Della529:
Historical income tax rates NOT adjusted for inflation (1913–2010)
Historical marginal income tax rates for Married Filing Jointly at stated income levels. Note that these income numbers are not amounts used in the tax laws at the time.[35]
[hide]Table of historical income tax rates
not adjusted for inflation (1913–2010)Year $10,001 $20,001 $60,001 $100,001 $250,001 1913 1% 2% 3% 5% 6% 1914 1% 2% 3% 5% 6% 1916 2% 3% 5% 7% 10% 1918 16% 21% 41% 64% 72% 1920 12% 17% 37% 60% 68% 1922 10% 16% 36% 56% 58% 1924 7% 11% 27% 43% 44% 1926 6% 10% 21% 25% 25% 1928 6% 10% 21% 25% 25% 1930 6% 10% 21% 25% 25% 1932 10% 16% 36% 56% 58% 1934 11% 19% 37% 56% 58% 1936 11% 19% 39% 62% 68% 1938 11% 19% 39% 62% 68% 1940 14% 28% 51% 62% 68% 1942 38% 55% 75% 85% 88% 1944 41% 59% 81% 92% 94% 1946 38% 56% 78% 89% 91% 1948 38% 56% 78% 89% 91% 1950 38% 56% 78% 89% 91% 1952 42% 62% 80% 90% 92% 1954 38% 56% 78% 89% 91% 1956 26% 38% 62% 75% 89% 1958 26% 38% 62% 75% 89% 1960 26% 38% 62% 75% 89% 1962 26% 38% 62% 75% 89% 1964 23% 34% 56% 66% 76% 1966–76 22% 32% 53% 62% 70% 1980 18% 24% 54% 59% 70% 1982 16% 22% 49% 50% 50% 1984 14% 18% 42% 45% 50% 1986 14% 18% 38% 45% 50% 1988 15% 15% 28% 28% 28% 1990 15% 15% 28% 28% 28% 1992 15% 15% 28% 28% 31% 1994 15% 15% 28% 31% 39.6% 1996 15% 15% 28% 31% 36% 1998 15% 15% 28% 28% 36% 2000 15% 15% 28% 28% 36% 2002 10% 15% 27% 27% 35% 2004 10% 15% 25% 25% 33% 2006 10% 15% 15% 25% 33% 2008 10% 15% 15% 25% 33% 2010 10% 15% 15% 25% 33%
by
Platinum Member
on Aug. 9, 2012 at 6:32 AM
Again, I suggest the book I just recommended.
Quoting Raintree:Why?
Provide historical proof.
Quoting momof31995:
No I am a surgical tech. Common sense tells you that a tax hike that high would destroy the economy.
by
Platinum Member
on Aug. 9, 2012 at 6:35 AM
I think she assumes the government creates business.
Quoting Meadowchik:
Quoting mehamil1:
Those who make a shit ton of money, what difference does it make to pay more in taxes? They already have way more than they need. Way way more. All I can chalk that up to is greed. Meanwhile, they keep the money and you have people on American streets who are starving. And no, it has nothing to do with lazyness. Those who are uber rich were born into that world. Very few of us ever make it that far up the ladder through working and earning money. It's greed, plain and simple.
I think you assume that governments distribute charity more effectively and efficiently than private individuals and foundations. Don't forget that many of the people who have developed the skillful ability to grow investments would not want to see that wasted through corrupted bureacracy. Wealthy people who set up their own foundations are evidence of this, conservative AND liberal ones.
by
Bronze Member
on Aug. 9, 2012 at 9:19 AM
Okay, let me try this another way. Aren't we all working hard, so that we may advance in our careers and make more money? And when we make more money won't we advance to the next tax bracket?
Quoting Raintree:I'm pretty sure people don't get that part, haha...
Quoting mehamil1:There's this thing called tax brackets...
Quoting lylalane7275:That's great. Would you be okay with giving 75 cents of every dollar you earn to the government?
Quoting Raintree:One of my first cousins lives in France with her family. They're very wealthy. They aren't leaving anytime soon.
Quoting lylalane7275:I would really like to know who here would be willing to give the government 75 cents of every dollar they earn? This is a very slippery slope and the rich are leaving France. That could happen here as well and if the rich leave, the middle class will have to take up the slack. Is that okay with everyone?
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Judge refuses to stop Arizona from denying driver's licenses to immigrants
- Carpy
on Aug. 7, 2012 at 9:19 PM