France, like the rest of the world, is facing economic ruin. The government has been doling out money so long that they’ve racked up a debt they can never hope to pay off and unemployment continues to creep up. To solve this problem the French have elected a socialist.
Think about that.
Due to economic failures the French elected a socialist. That’s like having a convicted repeat child molester babysit your children. Either way the new president of France, Francois Hollande, is calling for a 75 percent tax rate on those who earn more than 1 million euros a year:
“Above 1m euros [£847,000; $1.3m], the tax rate should be 75% because it’s not possible to have that level of income,” he said.
[…]
Mr Hollande himself renewed his call on Tuesday, saying the 75% rate on people earning more than one million euros a year was “a patriotic act”.
“It’s a signal that has been sent, a message of social cohesion, there is an effort to be made,” he explained.
“It is patriotic to agree to pay a supplementary tax to get the country back on its feet.”
Did you get that? It’s patriotic to have 75 percent of your wealth stolen! This idea isn’t going to fly as history has demonstrated. What most people who demand the rich be taxed don’t stop to consider is that the rich are wealthy enough to leave a country at will. The United States doesn’t have anywhere near a 75 percent income tax and many wealthy individuals are still renouncing their citizenships over the high taxation:
This year almost 1,800 people renounced their American citizenship and Green Cards as published in the Federal Register, thanks to a costly and timely tax requirement.
So here are my predictions for France, most of which are torn from the pages of Pictures of a Socialistic Future [PDF] (a great book written in the 1800s that successfully predicted what conditions in socialist countries would be like).
Upon the 75 percent tax rate becoming law many of the wealthiest in France are going to abandon the country and renounce their citizenships. After enough people start fleeing France the government will implement Soviet-esque border controls and prevent those with means from leaving unless they leave something behind as a hostage collateral. From there things will only get more draconian since the massively jacked up tax rate won’t actually improve economic conditions but will do quite the opposite. Not wanting to face the prospects of being successful people in France will cease any attempt at real entrepreneurship or turn entirely to the black market. As a last resort France may turn to issuing their own money again, which will be printed so fast hyperinflation will be guaranteed.
Basically France is fucked if they continue down their current economic road.
A factoid for the US that is probably roughly true for France, the wealthiest tax bracket accounts for 33% of spending in the economy. So for every 3% or so you raise their tax rate you reduce the total economic output by 1%, assuming everyone stays in the country.
But here goes the rest of the European economy i figure Germany the UK and the US are about to get a lot of new French mill/billionaires, which also means the cultural side of France will go poof with them.
They probably don’t need to renounce their citizenship over there. Most of the world (Europe included) is territorial based taxation, so if the wealthy simply move from France to a more tax friendly EU country (somewhat hard to define here since all the taxes in Europe blow), they would be exempt from French taxation. The US is one of the few countries that says we are going to tax you no matter where you live in the world based solely on citizenship.