Bad news: France in $14b euro hole after overestimating the haul from that swell 75% millionaire tax
posted at 9:21 pm on May 28, 2014 by Mary Katharine Ham
Overly sunny tax revenue predictions are not a problem unique to socialists, but you can see how those who adhere to an ideology that refuses to admit to basic human nature and the economic downsides of ludicrous tax rates might fall more dramatically than most. Timber:
The French government faces a 14bn-euro black hole in its public finances after overestimating tax income for the last financial year.
French President Francois Hollande has raised income tax, VAT and corporation tax since he was elected two years ago.
The Court of Auditors said receipts from all three taxes amounted to an extra 16bn euros in 2013.
That was a little more than half the government’s forecast of 30bn euros of extra tax income.
The Court of Auditors, which oversees the government’s accounts, said the Elysee Palace’s forecasts of tax revenue in 2013 were so wildly inaccurate that they cast doubt on its forecasts for this year.
It added the forecasts were overly optimistic and based on inaccurate projections.
Hollande, who endures a public approval rating of 20 percent (!), had first levied the whopping 75 percent tax rate on individuals making over a million euros. This prompted notable protests from actors and soccer teams, as well as the populace at which his populism was aimed.
Meanwhile, economic growth has been inconsistent and the unemployment rate hit a record high of 11% at the end of 2013.
The French economy saw zero growth in the first three months of 2014, compared with 0.2% growth three months earlier.
Brainstorm: Maybe we should hire a guy who can take France and turn 70 percent of them into veritable Tea Partiers on the tax issue.
On the upside, as Dan Mitchell notes, at least one French politician of the Socialist Party is acknowledging the Laffer Curve. If he can do it, anyone can!
“The level of taxes in our country has become intolerable,” Valls said in the National Assembly. “Too much tax, kills tax” receipts, he said on the evening newscast of TF1 television May 11.
Charles C.W. Cooke notes, “the British learned the same lesson in 2012, when a new 50 percent rate proved to be counter-productive.”
The New York Times would no doubt still like us to unlearn these lessons.