Flight of the French executives continues
posted at 6:01 pm on March 12, 2013 by Erika Johnsen
He’s been in office for less than a year, but the honeymoon phase is already over and Socialist French President Francois Hollande’s approval rating is on the strugglebus. Miraculously, his redistributive financial methods of governance have not managed to revive France’s stagnating economy, despite his campaign pledge to halt the jobs crisis and fight against austerity.
French President Francois Hollande, battling to appease voters as his economic goals recede, loosened a budget target for 2013 on Tuesday but clung to his pledge to end a jobs crisis.
On a two-day trip on Tuesday to eastern France aimed at convincing a sullen public he can restore the economy to health, Hollande admitted that deficit-cutting has been blown off course but said a delayed target was preferable to austerity measures that could stifle economic recovery. …
But Hollande insisted that he can reach his last standing goal, to reverse by end-2013 a rise in unemployment that has taken the rate to a 13-year high of 10.6 percent.
“The right economic strategy is to stay on this track without doing anything that can weaken growth,” Hollande told a meeting in Dijon, capital of the Burgundy wine-making region.
Except that that whole “not doing anything to weaken growth” strategy isn’t performing too well, either, since higher-tax policies don’t typically do much to jump-start the ol’ economic engines. France has been slowly bleeding some of its high-profile high-earners, and the Financial Times reports on fresh evidence of major French business executives looking at leaving the country — and while not everyone will outright say it’s because of tax reasons, there’s little hesitation about dumping on France’s anti-entrepreneurial and uncompetitive business climate.
Two senior executives at Moët Hennessy, the champagne and cognac arm of the LVMH luxury group, are moving to London from Paris and the head of Dassault Systèmes, the software arm of Dassault Aviation, said some senior managers of his company had left and he was considering following suit. …
But Bernard Charlès, chief executive of Dassault Systèmes, was sharply critical of the high tax policies of Mr Hollande’s Socialist government, telling Le Monde newspaper in an interview: “Residing in France has become a big handicap. Very largely, our hiring of top managers will have to be done elsewhere than in France.” …
One person familiar with the matter said other members of the executive board were moving to Singapore and Switzerland.
You can keep on raising taxes to pay for expensive government ventures all you like, but you better expect that people are going to act in their own rational self-interest and do what they can to save more of their own money. Unfortunately, per Drudge, this is a growing phenomenon that lately isn’t restricted to Socialist France:
John Paulson, a lifelong New Yorker, is exploring a move to Puerto Rico, where a new law would eliminate taxes on gains from the $9.5 billion he has invested in his own hedge funds, according to four people who have spoken to him about a possible relocation.
Ten wealthy Americans have already taken advantage of the year-old Puerto Rican law that lets new residents pay no local or U.S. federal taxes on capital gains, according to Alberto Baco Bague, Secretary of Economic Development and Commerce of Puerto Rico. The marginal tax rate for affluent New Yorkers can exceed 50 percent on ordinary income. …
Paulson executives, too, have already taken steps that may allow them to pay lower taxes. Last year, they put about $450 million into a new Bermuda reinsurance company that in turn invested all of its assets in Paulson & Co. funds. The structure positions them to defer any taxes on investment income from the funds for years, and to pay only the lower capital gains rate when they do.