Hollande looks to boost French economy by cementing that new-and-improved “millionaire tax.” Makes sense.

posted at 1:01 pm on December 30, 2013 by Erika Johnsen

Socialist French President Francois Hollande swept into office with a bunch of neat ideas about the surefire methods he had in mind for fulfilling the country’s pledge to Brussels to reduce the country’s deficit to less than three percent of GDP while simultaneously boosting economic growth, job creation, and businesses competitiveness, all on a platform that would be strictly against those distasteful austerity measures afflicting much of the wider eurozone. Surefire methods, like, say, levying an entirely populist and completely ineffective “supertax” of 75 percent on individual incomes surpassing a million euros a year — but most unfortunately, the French constitutional court struck that idea down as downright confiscatory, while financiers and economists vociferously advised against adding to the country’s already historically high tax burden as their economy has bounced between official contraction and barely-there positive growth.

But you can’t keep a good man down a desperate Socialist from clinging to his wealth-redistributive dogma, and it didn’t take long for Hollande to change tack and instead announce a new 75 percent tax on businesses that pay salaries of over a million euros a year. The French courts finally approved the measure over the weekend, via Bloomberg:

French President Francois Hollande received approval from the country’s constitutional court to proceed with his plan to tax salaries above 1 million euros at 75 percent for this year and next.

Under Hollande’s proposal, companies will have to pay a 50 percent duty on wages above 1 million euros ($1.4 million). In combination with other taxes and social charges, the rate will amount to 75 percent of salaries above the threshold, the court wrote in a decision published today.

“The companies that pay out remuneration above 1 million euros will, as expected, be called upon for an effort of solidarity on remuneration paid in 2013 and 2014,” the Economy Ministry said in an e-mailed statement.

And how effective will this hugely symbolic tax actually be in helping France to solve its fiscal problems? Hint: It won’t. Via CNBC:

However, the tax’s impact appears to be a lot less than the controversy it has generated: it is expected to raise less than 1 billion euros, which will not go very far towards solving France’s economic problems.

“Taxation is reaching the level of some of the Scandinavian countries,” Michala Marcussen, global head of economics at Societe Generale, told CNBC.

“It’s very hard to see how France can increase this further.”


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Le Tax

BobMbx on December 30, 2013 at 1:03 PM

Just 10-20 taxes away from utopia now.

Murphy9 on December 30, 2013 at 1:05 PM

I know — let’s increase inflation while letting wages stagnate while also arguing for “free trade” and immigration — awesome!

HB3 on December 30, 2013 at 1:06 PM

Quel génie

22044 on December 30, 2013 at 1:06 PM

Ha Ha! -Nelson Muntz Sarkozy

22044 on December 30, 2013 at 1:07 PM

Like a typical progressive elitist, he is personally wealthy and secure. So he feels free to experiment with the lives of others. Just like Obama.

pat on December 30, 2013 at 1:09 PM

It never ceases to amaze me the stupidity that comes out of socialists mouths.

sadatoni on December 30, 2013 at 1:12 PM

Sarkozy lurks in the wings, cracking walnuts with his pelvic floor muscles to please the wife, while waiting patiently to take over and do nothing in his own style.

BL@KBIRD on December 30, 2013 at 1:14 PM

Why stop at 75%…

PatriotRider on December 30, 2013 at 1:14 PM

So if 25% more is complete slavery, what does that say about 75%? Gives a whole new meaning to “working for the government”. Oh right, they make over 1 million euros, so who cares, right? Thing is, it won’t stop there. They’ll eventually do the same to those who make 10K per year.

MrX on December 30, 2013 at 1:16 PM

Gives a whole new meaning to “nouveau riche.”

Shy Guy on December 30, 2013 at 1:19 PM

Most have or will leave France.

Schadenfreude on December 30, 2013 at 1:20 PM

The young are fleeing France

Article is from the summer.

http://moneyweek.com/bill-bonner-the-young-are-fleeing-france/

Murphy9 on December 30, 2013 at 1:28 PM

Most have or will leave France.

Schadenfreude on December 30, 2013 at 1:20 PM

Don’t worry, the socialists will solve that problem with capital controls!

Doomberg on December 30, 2013 at 1:29 PM

You can’t tax your way out of spending.

Simonsez on December 30, 2013 at 1:34 PM

The sad part is that Obama and the rest of the progressives aren’t watching and learning from this.

No, actually the saddest part is that despite the lessons from France, Greece, Spain, Italy, Cyprus, and others, Obama and the rest of the US progressives insist that doing the same thing will have different results.

Athos on December 30, 2013 at 1:36 PM

You can’t tax your way out of spending.

Simonsez on December 30, 2013 at 1:34 PM

Correct. a tax rate of 100% will not dent their debt. Nor ours.

dogsoldier on December 30, 2013 at 1:38 PM

Athos on December 30, 2013 at 1:36 PM

I believe Einstein had a theory on that too, that is, expecting different results etc.

dogsoldier on December 30, 2013 at 1:39 PM

Why not take EVERYONE’S money away from them, then dole it back out as a monthly stipend?

GarandFan on December 30, 2013 at 1:41 PM

The sad part is that Obama and the rest of the progressives aren’t watching and learning from this.

No, actually the saddest part is that despite the lessons from France, Greece, Spain, Italy, Cyprus, and others, Obama and the rest of the US progressives insist that doing the same thing will have different results.

Athos on December 30, 2013 at 1:36 PM

I think there’s two separate issues here:

1. The desire to crush/punish enemies using socialism as an excuse

2. The eternal socialist assertion that the failure of socialist policies is because either they weren’t extreme enough or that the socialists in charge were “fake” socialists

Most of the socialists running things in the US are #1. I think there are still some #2 socialists in Europe and in academia, but the economic part of the ideology has been so thoroughly discredited that I think only the most blinkered ivory tower idiots still really believe in it.

Socialism these days is mostly about wannabe dictators and corrupt politicians using it as an excuse to tax the hell out of their enemies and enrich themselves and their friends, while claiming to be saints instead of thieves.

Doomberg on December 30, 2013 at 1:43 PM

Still has a way to go to match the old 105% income tax in Sweden in the 60s and 70s.

Companies will figure a way around it…perhaps the CEO can leave the company and be hired back a a consultant who is based in the Cayman Islands. Presto no tax at all for the company or the individual.

Sort of like millionaires in California, New York, Maryland who have second homes in Florida and change their domocile if taxes get too high.

txdoc on December 30, 2013 at 1:53 PM

Rich progressives who would never tax their own assets just others incomes

Mormontheman on December 30, 2013 at 2:05 PM

At some point taxation becomes confiscatory and an attack on freedom.

But as a political strategy, I think a focus on tax rates for the well-to-do hurts the GOP.

There are few economists saying that the increase on taxes for those earning more than $400,000 is hurting the economy. Indeed, the reduction in deficits (who says tax increases can’t help bring down deficits?) is adding to a (small) sense of economic stability.

Also, there used to be a large number of independents and conservatives who were persuaded by the argument that “Well, that could be me paying those rates someday.” Sadly, fewer and fewer Americans believe that.

Who pays these big tax numbers anyway? Blue state movie stars, Wall Street types, trial lawyers. Sure, there are some Red State entrepreneurs too — but relatively speaking, how many?

Finally, I think the emphasis on tax rates has taken the focus away from spending cuts. Cutting taxes, except for Lefties, is an easy argument to make and to do. Cutting entitlements is a lot harder.

I know none of this reasoning is original and is still anathema to most people here. But I’m tired of losing elections unnecessarily. The economic reasoning was always dubious — Clinton raised tax rates, other Presidents did, without ill economic effect — and the fairness argument cuts mostly against what the majority of voters feel and believe. I’m not saying the GOP should become the party of higher taxes; I just don’t think it should be something we go to the mats for.

bobs1196 on December 30, 2013 at 2:11 PM

Most of the socialists running things in the US are #1.

Doomberg on December 30, 2013 at 1:43 PM

It’s a little more complex that this…because the desire of the current US crop of progressive fascists is about maintaining their power / expanding the reach of that power in order to enrich themselves and their allies. Punishing or crushing their enemies are just a means to the ends of maintaining and expanding their power / wealth.

These elitists hold everyone not them in contempt. They are the 1% who believe that they can make better decisions for everyone and deliver better results via enforcing ‘fairness’ and ‘social justice’. Even those who receive the benefits of their efforts at ‘fairness’ and ‘social justice’ are little more than useful idiots to the progressive politicians. The recipients of wealth redistribution are seduced to vote their freedoms and liberty away chasing the false promise of equality of results and compassion from an authoritarian government.

These authoritarians have learned quite a bit in the 225 years since their ideological forefathers first sought to remake French society into an utopia on earth. But while they have learned to mask themselves and their agenda, they still haven’t learned that their agenda remains intellectually, ethically, morally, and fiscally bankrupt.

Athos on December 30, 2013 at 2:22 PM

So uh, what is the mechanism for higher taxes improving the economy.

*Starts Del’s sundial.

Murphy9 on December 30, 2013 at 2:31 PM

Most have or will leave France.

Schadenfreude on December 30, 2013 at 1:20 PM

Don’t worry, the socialists will solve that problem with capital controls!

Doomberg on December 30, 2013 at 1:29 PM

Followed by the barbed wire, savage dogs, machine-gun towers, and humorless men in uniforms with automatic weapons. The sort of “travel population control” all true Socialists dream of having over everyone else.

They don’t just want to rule; they want to be worshiped. And if you don’t, they will make an example of you pour encourager les autres (“to encourage the others”).

It’s no coincidence that this phrase is considered to be a French original.

clear ether

eon

eon on December 30, 2013 at 2:31 PM

The economic reasoning was always dubious — Clinton raised tax rates, other Presidents did, without ill economic effect — and the fairness argument cuts mostly against what the majority of voters feel and believe. I’m not saying the GOP should become the party of higher taxes; I just don’t think it should be something we go to the mats for.

bobs1196 on December 30, 2013 at 2:11 PM

You repeat one of the standard canards around taxation – that Clinton raised tax rates without ill economic effect. That’s not the case. Damage was done in 1993 and 1994 to the economy based on the tax increases that Clinton advocated. Taxation always damages the economy…the government, via it’s confiscatory actions of pulling funds from the economy, cannot generate wealth or positive economic effects anywhere close to as effectively as the private sector can. (Learn the Laffer Curve) The government is little more than a leach sucking blood from the body of the economy.

Where economic growth occurred within the Clinton tenure was when the GOP Congress convinced the President to accept a reduction in the capital gains tax rates – which then opened the spigots for investment as the same time that the internet created a new business paradigm. The combination of ideas and funds available for investment launched a boom that turned into a bubble when funds exceeded viable ideas.

The left argues for higher taxes in order to ensure ‘fairness’, ‘social justice’ via increased government control and spending (wealth redistribution). But regardless of the tax rate or tax revenues, regardless of the damage it does to the economy, it is and will never be enough.

We don’t have a tax rate problem – we have a spending problem. And unlike the wishes and promises of the progressives, the laws of economics, like the laws of physics and human nature, cannot be dismissed as inconveniences on a whim.

Athos on December 30, 2013 at 2:33 PM

I know none of this reasoning is original and is still anathema to most people here. But I’m tired of losing elections unnecessarily. The economic reasoning was always dubious — Clinton raised tax rates, other Presidents did, without ill economic effect — and the fairness argument cuts mostly against what the majority of voters feel and believe. I’m not saying the GOP should become the party of higher taxes; I just don’t think it should be something we go to the mats for.

bobs1196 on December 30, 2013 at 2:11 PM

The problem of high tax rates is that they are forever descending on the rich and landing on the middle class. The rich are nearly untaxable because they have the means to move great sums of wealth around via offshore banking and other means. If things get too hot for them they WILL move their businesses elsewhere. The big target for taxation is the middle class because they lack the resources to get their wealth offshore and to have accountants dedicated to keeping their money safe from the feds.

Obamacare is a big example of massive tax increases on the middle class under the thin veneer of “health care reform.” In the current economic environment, stripping the middle class of their resources is pure madness.

I also think that people calling for us to jettison various parts of the GOP’s platform need to propose a viable alternative. If social conservatism and fiscal conservatism are now “too extreme,” what should the GOP run on? To be honest I see little evidence that running on the old GOP platform hurts us. Indeed, in every election, the Republicans run further and further away from it, and as a consequence seem to be losing nearly every time (except in 2010, where the Tea Party essentially pushed the Republicans aside and ran on a platform of aggressive fiscal conservatism).

Doomberg on December 30, 2013 at 2:36 PM

Meanwhile, 2014 will ring in the term of NY’s very own Bill “Hollande” DiBlasio!

Is that an apple that’s dropping at Times Square or the state’s economic outlook?

MJBrutus on December 30, 2013 at 2:52 PM

Hey Libfree! In case you show up here!!

http://www.theguardian.com/commentisfree/2013/nov/14/youth-unemployment-wreck-europe-economic-recovery

WryTrvllr on December 30, 2013 at 2:53 PM

Under Hollande’s proposal, companies will have to pay a 50 percent duty on wages above 1 million euros ($1.4 million).

However, the tax’s impact appears to be a lot less than the controversy it has generated: it is expected to raise less than 1 billion euros, which will not go very far towards solving France’s economic problems.

A 50% surtax on incomes above 1 million euros will generate at least 500K euros per person affected. If the tax raises a total of less than 1 billion euros, it will affect less than 2,000 people.

But these are probably top executives of major French corporations, who will probably seek employment with foreign (non-French) corporations to avoid a 50% pay cut. So the best and brightest France has to offer will be working for non-French corporations, helping them make money (and provide jobs) at the expense of French corporations and jobs.

Francois Hollande is trying to undo in France what that laissez-faire conservative JFK did in the USA over 50 years ago. Oh wait a minute, he was a Democrat!

Steve Z on December 30, 2013 at 3:20 PM

Nothing like hate and revenge in power. HE’LL show those rich people who’s boss.

Hollande, too.

RobertMN on December 30, 2013 at 4:00 PM

Ah, the Louis the XVI gambit.

rbj on December 30, 2013 at 4:01 PM

Absent cronyism, people are paid high salaries because they made money for their companies. In most countries, a War on the Wealthy is actually a War on the Productive and, in a real sense, a War on the Upstarts so that they cannot make it into the ranks of the Old Wealthy.

If a country wanted to tax the wealthy, one simple method would be to make dividends paid tax deductible to corporations and taxable as ordinary to the individuals receiving them.

Laurence on December 30, 2013 at 4:04 PM

I think this is smart politics on Hollande’s part. People aren’t voting these days for what works. Otherwise more conservatives would be in power. Instead, people are voting for whomever gives them that thrill of excitement that comes when you take down the Man. High taxes on the rich give people that kind of thrill. It’s the same kind of thrill a delinquent teen gets when he eggs the principal’s house.
Woohoo. Fun times.

Burke on December 30, 2013 at 5:11 PM

Why not take EVERYONE’S money away from them, then dole it back out as a monthly stipend?

GarandFan on December 30, 2013 at 1:41 PM

I like it!

From each according to his ability, to each according to his need . . .

. . . this might have legs.

Axe on December 30, 2013 at 5:13 PM

************** Le Stupido *************************

canopfor on December 30, 2013 at 6:37 PM

I’ve corrected the error in the title:

Hollande looks to boost French economy by cementing that new-and-improved “millionaire tax.” Makes cents.

Shy Guy on December 31, 2013 at 12:04 AM

I predict many more French folks will flee (technically) this Socialist cookie monster by claiming residency in nearby Monaco as has been the pattern for the flight of French wealth for decades now.

They’ll come back to spend some of it in Paris now and then.

Don L on December 31, 2013 at 8:15 AM