Free Markets, Free People

France to impose a 75% tax on "the rich"

The “you didn’t build that” gang’s attempt to get the “rich” to pay what they characterize as their “fair share” in taxes (when in fact in almost every western country they pay more than their fair share) is about to get tested in France:

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.

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 question asked by the client is typical of what will happen if such a tax is imposed … anywhere.  If you believe “the rich” are going to lay back and take it, you’re crazy.  They will do what is in their best interest and paying 75% taxes on what they earn isn’t in their best interest.  We’ve often talked about the Laffer curve and how it applies to taxes.  How at some percentage of taxation, revenues will drop and in some cases drop dramatically.

That’s precisely what that client’s question indicates will happen in France with a 75% “rich” tax.

France has a history of punitive taxation which is one reason it no longer is considered much of a economic power:

[T]he 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.

Businesses don’t have to stay and take France’s coercive tax rates anymore.  There are countries more than happy to accept their businesses and the boost to the economy they bring. 

And, that goes for “le rich” as well.  ‘Leaving the country’, in the case of France, doesn’t necessarily mean moving too far:

“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.”

You’d think, for anyone with an ounce of common sense, this outcome would be obvious.  Apparently not.  And so France will drive off its rich, see revenues in that income bracket drop even while the tax percentage is increased to 75% and attack those who’ve avoided those taxes as “greedy”.  Just watch.

Of course I agree with the words of Dr. Thomas Sowell in that regard:

“I’ve never understood why it is “greed” to keep money you’ve earned, but not greed to take somebody else’s money”.

Yeah … me neither.  Right now, the greediest entities on earth are governments.

~McQ

Twitter: @McQandO

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22 Responses to France to impose a 75% tax on "the rich"

  • They will be shooting themselves in the foot with such a tax. Why do liberals not understand the stupidity and the sheer wrongness of such a tax?

    • They understand neither – what they understand is there are people out there with money who aren’t spending it the way Liberals would like, and so in the interest of fairness they must be MADE to do as they’re told, by Liberals.

  • What gets me about this is how recently it was tried, and how miserably it failed, in Great Britain. They pushed their top rate to 50% and revenue tanked. They dropped it back to 45% after a year.
    Yet the politics of envy and socialism, ever immune to the lessons of reality, push for the same idiot scheme in France. And in America, too, for that matter…

  • See, folks, this is what the UN is really for.  A nice world tax would end all that greedy “voting with your feet” stuff.
    They just close all the polling places.
    In the meantime, someone said there is nothing so mobile as the rich.  Le bye

  • Hey, we should be grateful, big-ears admitted he understood that people’s work and time has value – he grumbled because his SPOUSE isn’t paid to be First Lady, so he gets the concept, at least when it comes to HIS family wallet.
     
    I think we should pay her to be First Lady, and then tax it at 100%.

  • They elected an avowed socialist- why are the rich only considering leaving France now?
     
    Tax the rich @ 75% and 75% of the rich leave. Now guess who the state will need to collect revenues from?
     
     
    I love it. The French are going to get what they have coming.

    • Going to discover the same thing we will, you CAN’T balance your books on the back of the rich.

      • There is nothing in history to show that you can balance your books with tax hikes…not even if they fall on every producer out there.

        • Eventually the adults come and make them clean up their mess.   Or was that the Gods of the Copybook headings…..

  • After the Bush tax cuts went into effect, tax revenue hit record highs. If only the CBO were allowed to account for reality in its’ projections, a tax hike wouldn’t be automatically rated as an increase in revenue.

  • “After the Bush tax cuts went into effect, tax revenue hit record highs.”

    Where do you get this stuff?

    Income tax receipts did not even get back to 2000 levels until 2006, and by 2008, they were only 14% higher than the 2000 receipts, which is LOWER than the cumulative inflation rate from 2000 to 2008. Tax receipts went down and stayed down, in real terms until 2006, and in adjusted terms. The inflation adjusted 2000 receipts would be $1,255,886,654.97 in 2008 dollars, we have barely gotten back to that level 10 years later.

    What do you do when you learn that what you have been told about the tax cuts resulting in higher tax revenues turns out to be false? Do you just forget you learned this fact, or do you change your opinion of the effect of tax cuts on revenues?

    Here are the income tax receipts for each since 2000.

    2000
     $     1,004,462,000.00

    2001
     $        994,339,000.00

    2002
     $        858,345,000.00

    2003
     $        793,699,000.00

    2004
     $        808,959,000.00

    2005
     $        927,222,000.00

    2006
     $     1,043,908,000.00

    2007
     $     1,163,472,000.00

    2008
     $     1,145,747,000.00

    http://www.whitehouse.gov/omb/budget/Historicals

    Please don’t complain about the source being the White House, that is THE source, the Office of Management and Budget.

    • You moron, the BOOOOOOOOOOOOOOOOOOOOOOOOOOOooooooooooooooosh tax cuts did not really kick in until 2003-04.
      There goes the ol’ trend line and cause-effect relationship….!!!!
      See the purty RAMP up after that?

      • “You moron, the BOOOOOOOOOOOOOOOOOOOOOOOOOOOooooooooooooooosh tax cuts did not really kick in until 2003-04.”

        The tax cuts kicked in 2003, and I never said they didn’t, I included 2000 because Phil sad income tax receipts reached record levels after (and as a result of) the Bush tax cuts. The reality is that it took 3 years before tax receipts reven eached 2000 levels, AFTER dropping significantly in 2003 (-7.5%), a slight uptick from 2003 in 2004 (+1.92%) and a larger increase in 2005 (+14.62%), but still below 2000 level, until it finally eclipsed 2000 levels in 2006. You would have to be stupid or lying to think that tax receipts would have been lower if the 2000 tax rates were in place for these years. During the 90’s, income tax receipts increased 111%, for the 8 years from when the Clinton tax increases when into effect. During the 2000’s, federal tax receipts increased a paltry 36% during the 8 years following the Bush tax cuts.

        This is not a fair comparison since it includes the great recession, but since the claim was made that tax receipts reached record levels, I have to look at the numbers. But in order to just try and be fair, I took the WORST 7 years of tax receipt increases after the Clinton tax increase (1992 to 1997) and the BEST 7 years of tax receipts after the Bush tax cuts (2002 to 2007), and still tax receipts significantly more (55%) than after the Bush tax cuts (35%).

        No matter how you look at it, tax receipts do not go up more after a tax cut than they do after no change or after a tax increase.

        Tax receipts will eventually catch up because of economic growth, but economic growth happens after tax increases as well as tax cuts, and there is zero empirical evidence that economic growth is greater after tax cuts, that is simply a matter of faith among supply siders. But what is not a matter of faith is the fact that economic growth is hampered when the debt to GDP ratio is too high, as it will be when taxes are cut below federal spending levels.

        • No matter how you look at it, tax receipts do not go up more after a tax cut than they do after no change or after a tax increase.

          You are typically full of crap.  What happened in GB after the recent tax increase?
          As between 2003 and 2008, did or did not tax revenues increase in real dollars.
          Yes or no, moron.

  • “See the purty RAMP up after that?”

    Let me make this simple enough for an idiot to understand.

    Income Tax receipts in 2002 (recession) was $858,345,000

    Income tax receipts in 2003 (first year of Bush tax cuts and NO recession) $793,699,000 (7.5% less than the 2002 recession year receipts and 21% below 2000 reciepts)

    Income Tax receipts in 2004 was $808.959,000 (5.7% more than the recession year of 2002 and 19% below 2000 reciepts)

    Income Tax receipts in 2005 was $927,222,000 (8% more than the recession year of 2002 and 8% below 2000 reciepts)

    Income Tax receipts in 2006 was $,1043,908.000 (21% more than the recession year of 2002 and finally, after FOUR YEARS a paltry 4% over 2000 receipts)

    If you think that is an attractive trend, you clearly have no understandine of even automatic spending increases, not to mention the discretionary spending binge that was going on to make this flat trend into an even uglier failure.

    I think this is one of the dumbest lies that conservatives tell. It is so easy to find the truth, and yet they all seem to believe it. I don’t doubt there is a point where taxation could lead to less productivity, for example, 100% is a sure bet. But the difference between 39.6% and 35% does not cross a line on the Laffer curve. Although the capital gains tax cuts may well have led to the mad scramble for capital gains that created the market for the CDO’s that crushed our economy.

    I think I’ll call that the Sarcastic Curve, when you create tax policy that shifts money into a bubble that crashes the economy.

    • You are typically full of crap.  What happened in GB after the recent tax increase?

      As between 2003 and 2008, did or did not tax revenues increase in real dollars.

      Yes or no, moron.

      • “As between 2003 and 2008, did or did not tax revenues increase in real dollars.”

        I posted the numbers, you can clearly see that eventually, tax receipts caught up to where they were before the tax cuts. They did not increase nearly as fast as spending, and they clearly did not catch up fast enough to balance the budget. But YES, four years after the tax cuts, receipts finally caught up to where they were seven years earlier.

        I thought the supply side argument was that tax cuts make receipts go up FASTER than if we didn’t have them.

        Did that happen, YES or NO?

        • First, answer my questions, you lying POS.
          What happened in GB after the recent tax increase?
          As between 2003 and 2008, did or did not tax revenues increase in real dollars.
          Yes or no, moron.
          You are looking really dishonest, you know.  People are pointing and laughing.