Over the weekend, the citizens of France elected a new socialist majority into the lower house of parliament, completing the trifecta of socialist governance along with their already-socialist Senate and their newly-elected socialist president. Part of President Hollande’s campaign platform was a promise of higher taxes on the wealthy and on big businesses in order to help pay down the country’s debt (but of course, more government spending and more entitlements are also on the docket). Now that Hollande has a fully cooperative parliament behind him, it looks like that plan is going full steam ahead.
For some peculiar and inexplicable reason, France’s captains of industry aren’t too excited about the pending penalties — er, I mean — taxes.
Bracing for a less business-friendly government, Medef President Laurence Parisot said employers’ concerns were falling on deaf ears in the government as they faced what she described as unprecedented uncertainty due to Europe’s debt crisis.
She warned margins were tumbling, orders collapsing and cashflow dwindling as investment and hiring were put off or cancelled outright in the face of the uncertain economic outlook.
“We’ve had many meetings with the staff in ministries to explain what’s happening, but we are becoming deeply distressed. We fear a systematic strangling,” Parisot told a news conference.
The government of President Francois Hollande, who was elected last month on pledges to fight unemployment and revive growth, is preparing to hike taxes on large companies and make firing workers more costly for employers to discourage layoffs.
When businesses and entrepreneurs start to find their environment counterproductive to their ends, they reliably start weighing their options and looking around at their neighbors for happier hunting grounds. At the G-20 summit in Mexico, British PM David Cameron made it known that he’d welcome French businesses with open arms (not that Britain’s tax code is especially enviable, but if it’s a question of alternatives…). There’s nothing like a good old-fashioned bit of French-versus-British competition:
Cameron slammed Hollande’s tax-and-spend approach to resolving the eurozone crisis in remarks before business leaders widely reported in the press but so-far unconfirmed by Downing Street officials.
“I think it’s wrong to have a completely uncompetitive top rate of tax,” Cameron said ahead of a Group of 20 meeting of leaders of the world’s largest economies in Los Cabos, Mexico.
Cameron promised to “roll out the red carpet” for France’s wealthy and businesses if Hollande’s government goes ahead with a campaign pledge to increase the tax rate on earnings above $1.26 million to 75 percent. …
Besides the 75 percent top tax rate, Hollande has pledged to crack down on tax breaks and raise taxes on banks and oil companies while reducing taxes on small and medium sized businesses.
Riddle me this, socialists: How do “big” businesses get that way? Businesses become big when a lot of people voluntarily decide to purchase their services. Oil companies and banks are entities of which almost everyone makes use in some capacity, and the efficiency they bring into our lives makes the world go ’round. Not everybody uses a hair salon or a bagel shop, but just about everybody has some stake in the energy and financial sectors. Targeting big businesses for increased taxation is just a pretty method for increasing prices and costs for everybody.
Heightened uncertainty, further restrictions, increased entitlement spending… sounds like a recipe for economic growth if ever there was one!
General political wisdom prescribes that if you want to discourage a certain behavior, you can tax it. Why anyone thinks its a good idea to tax success at a higher rate than everyone else, I’ll never understand.