France - 75% tax for high earners!

[santa]

France unveils a budget heavy on taxes - Yahoo! News

PARIS (AP) — The French government presented a budget Friday that was heavy on taxes — including a controversial 75 percent income rate on high earners — but which critics said lacked fundamental reforms that could jumpstart economic growth


Because Hollande promised that he would slash the country's deficit to 3 percent next year — a limit required by European rules — the government must find €30 billion in savings. One-third will come in spending cuts, with the rest in new or higher taxes on the wealthy and big companies, including a 75 percent tax on incomes over €1 million.

Among the other measures included are: a new income tax level at 45 percent for those making more than €150,000, an increase of capital gains taxes to bring them more in line with how salaries are taxed, and a cap on certain deductions for large companies on their income taxes.
The 75 percent tax will last for two years and has always been billed as a symbolic measure since it will bring in very little revenue. Several businessmen and politicians in the opposition have said that's exactly what's wrong with the 2013 budget: It sends the message that France doesn't like the rich and isn't open for business.

I'm staggered by the percentage of tax. Surely those with millions will still afford the best expertise to protect their money, while it penalises those in the higher mid range and above striving for more. And penalising business with more capital gains tax too....

 

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[Kak]

Sounds like our carter administration. Ebtrepreneurs would either spend it on shit like private jets and chauffeurs or loose it.

I would leave imediately.

 

[theag]

I guess Monaco will get a few new residents..

 

[santa]

Yep, looks like you're both spot on. Interesting comment here on the implications;
http://www.nytimes.com/2012/08/08/b...5-tax-rate-is-passed.html?pagewanted=all&_r=0

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 — an estimated 7,000 to 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.”

The original article has a chart of % of tax for top earners from other countries too.
57%-Sweden
50%-Japan,Britain
45%-Germany
43%-Italy
35%-USA
29%-Canada
13%-Russia


Thats over a 60% swing between Russia and France! 40% more than USA!

 

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[MakeItHappen]

Lol this is just bullshit... just because you are successful you only have the right to keep 1/4 of your earnings? I mean it won't hurt the high earners to bad but it's a matter of principle. If a lot entrepreneurs will leave the country because of that... all the people will wonder where all the jobs have gone...
I would never be willing to give 3/4 of my income away while creating jobs and bear the financial risk for my business 100% on my own.

 

[Mike39]

Lol this is just bullshit... just because you are successful you only have the right to keep 1/4 of your earnings? I mean it won't heart the high earners to bad but it's a matter of principle. If a lot entrepreneurs will leave the country because of that... all the people will wonder where all the jobs have gone...
I would never be willing to give 3/4 of my income away while creating jobs and bear the financial risk for my business 100% on my own.

Welcome to socialism 101. Comrade

 

[1PercentStreet]

I mean it won't hurt the high earners to bad

If you take away 75% of my income, I'm not going to be jolly.

 

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[Kak]

Dude i gaurentee the majority of americans would support this exact ledgislation.

We have a fundemental people problem in this country. Its not obama or congress, it is the people who think that obama is a good idea. This is why I have an exit strategy and already have some of the connections in place. Our people problems dont just go away with a different president.

 

[socaldude]

If you take away 75% of my income, I'm not going to be jolly.

Even here in the U.S., When you hit Fastlane income levels you are gonna be writing 6 digit or even 7 digit checks to the government every April 15!

I agree with Kak. People here in the U.S. think that earning lots of money is "unfair" or wrong as if it was the easiest thing in the world to build a million dollar business or work your way up the corporate ladder. People here want a better life but they have absolutely no clue how wealth is created via economics. "Just tax the shit out of it, distribute it, and we will all be well off!!"

 

[PopEmersen]

I'm all for taxing people according to their earning but anything over 50% is too much in my eyes. There is no reason any one should pay more than half their earnings to any government. That's absurd to me. 75% is absolutely crazy.

 

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[theag]

I'm all for taxing people according to their earning but anything over 50% is too much in my eyes. There is no reason any one should pay more than half their earnings to any government. That's absurd to me. 75% is absolutely crazy.

What the F*ck? 50% is ok in your eyes? How do you justify that?

 

[PopEmersen]

honestly, theag, I don't know what I am comfortable with since I haven't paid that much BUT what I do know is paying someone or some entity more than half my earnings doesn't sound right at all.

 

[Pavon]

I guess Monaco will get a few new residents..

French citizens living in Monaco are bound by law to pay their taxes in France. They need a new citizenship

 

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[Kak]

I'm all for taxing people according to their earning but anything over 50% is too much in my eyes. There is no reason any one should pay more than half their earnings to any government. That's absurd to me. 75% is absolutely crazy.

I am for a fair tax rate. People should all pay the same rate. And people who dont pay shouldnt vote. Period. Of course all of this is a giant pipe dream and will never happen amidst this country's economic death spiral.

 

[socaldude]

The bigger government gets the more expensive it becomes(more taxes). This is why Italy has a 50% tax rate. College is free. And a bunch of other stuff. But the debt.....

I for one believe in the power of the private sector. Its WAY more efficient.

Obviously taxes are a part of life and we all have to pay them. Its just a part of the game. But i don't like it when it gets out of hand because the majority(voters) have a victim and entitlement complexity. You know the ones who spend their $5k tax refund at Best Buy. A single mom working 2 jobs genuinely trying to get by is different, but the other "majority" are really gonna screw it up.

 

[Kak]

honestly, theag, I don't know what I am comfortable with since I haven't paid that much BUT what I do know is paying someone or some entity more than half my earnings doesn't sound right at all.

Think about it this way wado. At 50% you work January through June for the government. You don't get see a cent of that money. That is completely wrong. I don't think the government should play that big of a role in anyones lives.

I can understand a 10% tax rate on all income no brackets. Or a 10% simple consumption tax unless it is a business expense. Make this crap easier. There is also absolutely no reason the government needs to be bigger than 10% of GDP.

 

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[PopEmersen]

Think about it this way wado. At 50% you work January through June for the government. You don't get see a cent of that money. That is completely wrong. I don't think the government should play that big of a role in anyones lives.

I can understand a 10% tax rate on all income no brackets. Or a 10% simple consumption tax unless it is a business expense. Make this crap easier.

That makes sense, that is wrong. I agree, it should be alot simpler.

 

[socaldude]

Its not surprising that the tax code is screwed up. The government is not exactly the most efficient and smartest thing. Hell california pays officers $150k a year to give out parking tickets.

In the U.S. I don't think we will EVER pay a flat tax because that would considered "too nice" to the rich because after all they need to be punished for making me miserable and poor.

 

[ChickenHawk]

I'm all for taxing people according to their earning but anything over 50% is too much in my eyes. There is no reason any one should pay more than half their earnings to any government. That's absurd to me. 75% is absolutely crazy.

See, I agree with this statement. But that doesn't mean I'm in favor of taxing anyone 50%. It's just that I don't know how anyone in ANY country could justify taking more than half of what someone earns. To me, this SHOULD the maximum tipping point where no sane person would expect more.

Realistically, the tax rate should be much lower. I've seen how government operates firsthand. Trust me, they're not good stewards of your money.

 

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[PopEmersen]

See, I agree with this statement. But that doesn't mean I'm in favor of taxing anyone 50%. It's just that I don't know how anyone in ANY country could justify taking more than half of what someone earns. To me, this SHOULD the maximum tipping point where no sane person would expect more.

Realistically, the tax rate should be much lower. I've seen how government operates firsthand. Trust me, they're not good stewards of your money.

Thats what I meant, thank you for stating that MUCH better than I did, lol.

 

[OnePerCent]

It's quite "No Democracy" if a government tax rate is over 30%, for every earners, top and low ones.

 

[BostonH]

What a loser's lament. The government uses taxes to keep your money safe, and to protect the lowest common denominator. You, if you are a high earner/multimillionaire, impose a much larger burden on the national infrastructure and therefore should have a higher burden to keep it intact. I am proud to pay the taxes I owe, and I will be more proud still when my tax rate goes up hopefully with increased income (though in the USA, capital gains are barely taxed). There is a reason France has the best healthcare system in the world and some of the happiest citizens. And this is coming from a proud American (generally a pretty jealous, France-hating country).

 

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[mlangley]

Wow 75% is just disgusting. I smell the French revolution 2.0, after all the millionaires flee the country and the gooberment can't afford to float all the "needy" citizens.

BTW - isn't the word millionaire French in origin?

 

[PatrickP]

What a loser's lament. The government uses taxes to keep your money safe, and to protect the lowest common denominator. You, if you are a high earner/multimillionaire, impose a much larger burden on the national infrastructure and therefore should have a higher burden to keep it intact. I am proud to pay the taxes I owe, and I will be more proud still when my tax rate goes up hopefully with increased income (though in the USA, capital gains are barely taxed). There is a reason France has the best healthcare system in the world and some of the happiest citizens. And this is coming from a proud American (generally a pretty jealous, France-hating country).

How does a person who makes a lot of money " impose a much larger burden on the national infrastructure" ?

 

[ChickenHawk]

What a loser's lament. The government uses taxes to keep your money safe

And here I thought the Loser's lament was, "Gimme! Gimme! Gimme!!!"

 

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[Kak]

What a loser's lament. The government uses taxes to keep your money safe, and to protect the lowest common denominator. You, if you are a high earner/multimillionaire, impose a much larger burden on the national infrastructure and therefore should have a higher burden to keep it intact. I am proud to pay the taxes I owe, and I will be more proud still when my tax rate goes up hopefully with increased income (though in the USA, capital gains are barely taxed). There is a reason France has the best healthcare system in the world and some of the happiest citizens. And this is coming from a proud American (generally a pretty jealous, France-hating country).

You are proud to willingly fork over money when coerced the government which was voted in by conflicts of interest? These are the people who don't pay taxes and vote themselves other peoples money. This is legalized theft plain and simple. It is exactly like being proud to get your money stolen from the mafia.

So what happens when the government (IE these people) decides all profits will go to them and you are to receive compensation equivalent to the masses? Still gonna be proud? It's fair that way right?

 

[skipper]

This is basically legalised theft and goes agains the right for private possession etc.
But I fail to see reasoning for such taxations. I mean, ok, it's easy to sell to Joe Average (yeah, we'll get the money from those loaded fat pigs). But really... if you have millions you know how to protect them. At least if you earned them with your sweat. I fail to understand how people fail to see the countries are competing with each other to attract loaded fat pigs Laffer curve - Wikipedia, the free encyclopedia .
I mean, I'm not rich _yet_, but I'd love to see rich people in my country. More needs for luxury goods and services, more jobs, more money, more everything. How hard is that to see?

But a simple psychological fact is that people are more miserable if they compare themselves to somebody else. If I'm poor and you are poor we are good. If i'm poor and you are loaded, I'm miserable.

Pathetic, really.

 

[BostonH]

How does a person who makes a lot of money " impose a much larger burden on the national infrastructure" ?

In innumerable ways. If you are selling products your trucks (or shipping companies') are driving the roads more, causing wear to that infrastructure and also polluting. You're using natural resources to build your product, and that goes the same if you're in real estate, construction, etc. Your money is working in more exotic financial vehicles, requiring more regulation and oversight so that it is not stolen from you by bankers or nefarious hedge-fund managers. The list goes on and on.

None of that is a bad thing, mind you, it's just fact. It means you're making an impact! As MJ says, to make millions, you must impact millions. You're probably also needing to employ people and providing value to your customers, which is great. If you didn't do it, perhaps someone else would, but then it would be them who was making the impact, and not you, and thus, it would be acceptable for them to pay their share as well.

The greatest thing about all of this is that if someone in the country decides they don't like the situation, they can choose to leave or do something different. It is yet to be seen if they will or not. I suspect if this policy was trotted out by Florida, PatrickP would have his accountant take a look at everything and see how it would actually impact him, and weigh the pros and cons and make a decision. But remember, the better the local population is doing, the more they are spending, the more they are buying your product, or spending money with the company in which you have stock or other money invested, the better everyone does. You are typically going to be better off when most of the people around you are better off. Not when a few neighbors are very very well off.

Perhaps not a popular opinion, because it is nuanced and complicated. It's much easier to say "tax man don't take my money!" In the end we all want more money, and in some cases once we get to a certain sum, to be able to generate more from what we have. Nothing wrong with that. We just have to weigh all sides.

On a much smaller note, everyone needs to remember that it is a graduated tax rate. There LITERALLY is no scenario where they would take 75% of your money. It is mathematically impossible. Only once your income (not dividends) rises above ~$1.3 million does that come into play, and even with a business, that is after your expenses. Even the article says that this particular part of the policy will not bring in much money.

 

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[Mike39]

BostonH I appreciate your sense of patriotism but sometimes you have to peel back the curtain and realize you are being played.

requiring more regulation and oversight so that it is not stolen from you by bankers or nefarious hedge-fund managers.

You HONESTLY believe that the government is protecting you from bankers and hedge fund managers? Let me give you some glorious examples of how our government is deceiving you and destroying our nation while their at it. There was a government conference a while back that they found out the spending on food alone was outrageous. "the department spent $4,200 on 250 muffins — or more than $16 apiece." (See excerpt below. Government spends ridiculous amounts of YOUR money on completely pointless shit, just so they can meet their budget, so they won't get their budget cut and so they can get a bigger budget next year, it is a wicked cycle. From a personal experience, I remember a group of politicians (like 4 couples or something) going up to a multi million dollar mansion and getting some R&R for the weekend, the tab from that weekend, $13,000 (FOR 6-8 PEOPLE!) And we are not even taking into account the fact that 99% of politics in this ridiculous country is completely corrupted by greed and personal gain. I have seen politicians (BIG POLITICIANS) get bought out in person, the nicest of em will drop all morale values at the first mention of a check. If you want to see another interesting view into the joke we call the US government, I encourage you to watch "Casino Jack" the movie, it gives a pretty damn accurate representation of the NORM in this country. Politics in today's age is just doing whatever for whoever is willing to pay you the most, it's not about helping the people, no mater what they will tell you, it is about personal gain for ALL OF THEM. Don't let the fact that you have been molded to be "patriotic" since birth allow you to see past what is actually going on in this country, you are the being played, you are the puppet attached to the strings of America. Stop letting the wool get pulled over your eyes buddy. I would feel great about paying even 30% taxes if I knew my money was actually being used in useful ways, but it's not. (Sorry for the politics talk MJ)

And don't even get me started on the us debt, try feeling patriotic after watching this for 10 minutes: U.S. National Debt Clock : Real Time

Muffin Article: Government spent excessively at conferences | report, spent, washington - Report - Colorado Springs Gazette, CO

"A report issued Tuesday by the Justice Department's inspector general found excessive spending on food and beverages in an audit of 10 department conferences.

Justice spent about $490,000 on food and beverages at the conferences — more than 10 percent of the $4.4 million total cost of the events.

In response, the Justice Department concurred with the IG's recommendations to more closely monitor costs.

The department hosted or participated in 1,832 conferences in 2008 and 2009, costing $121 million.

The IG's report said that at a Washington, D.C., legal conference, the department spent $4,200 on 250 muffins — or more than $16 apiece."

 

[Kak]

I like the competition aspect to a country too. Like in business most customers will go to the company that provides the most value for their money. Countries should be viewed exactly the same way. Entrepreneurs who are not brainwashed to be patriotic will simply realize this and leave. With them will also go the jobs.