FRANCOIS HOLLANDE'S TAX POLICIES

poeticseraphim

http://www.ft.com/intl/cms/s/0/b4f1ba84-c5c1-11e1-a5d5-00144feabdc0.html#axzz1zsbBFsuh

http://www.timesofmalta.com/articles/view/20120705/business-news/France-taxes-big-firms-rich-to-balance-budget-by-2017.427265

http://www.independent.ie/business/european/francois-hollande-announces-french-tax-grab-on-holiday-homes-3159313.html

First a 75% tax rate on those earning over 1 million Euro i believe.

And now a raise on the tax of French holiday home for foreign owners (including Irish) from 19% to 34.5% on sales and from 20% to 35.5% on rental income.

The 75 % tax rate is said to affect 3000 households in France an Hollande said it is more to deter excessive financial sector salaries and as a symbol.

Some big businesses are knuckling down and getting on with it ...many of the biggest apparantly ..others are looking overseas.

So is it the way to go?

Or will it chase wealth out of the country along with an ability to produce growth? france has been lagging it getting it's debt and deficit under control

Some think wealth will flea to the UK or elsewhere.. http://www.telegraph.co.uk/finance/g20-summit/9342442/G20-summit-Francois-Hollande-not-amused-by-David-Camerons-tax-jibe.html

It will be interesting to see the results of this approach for France and what that would mean for elections over Europe over time. It will be ineteresting to see how this approach achieves results in comparison to Merkel's approach. And it will also be intersting see if the electorates sway their votes to either a left social growth camp or a right austere camp in reaction to results in France.


What affects do people think it will have in Europe economically and politically?

If it succeeds or backfires or gives equal performance to the Merkel approach how will the left react?

If it fails of course it will work hugely against the Left...if socially or economically successful well it could change the balance of political power in European elections.

It matters hugely though which way Germany votes left or right....Merkel's party lost a state election in May ..but recent polls say they are still the most popular party in Europe. Interestingly German voters show support for her position and performance at the EU summit http://www.euronews.com/newswires/1577240-merkels-popularity-up-backing-over-euro-firm-poll/ rather than penalizing her for it. The polls show a huge support for a German referendum before handing over any more power to the EU.. THIS WOULD BE THE FIRST GERMAN REFERENDUM SINCE THE NAZI PERIOD!!! I find that incredible ....i love me some referenda :P The Germans also show strong support for her view that their needs to be much more political integration andunion before anymore debt mutualization.

Sorry if it seems like i put a lot into one thread...i did not want to start ultiple threads as i already started one other:)

poeticseraphim

Oh this should this be in the EU section??

Sorry mods i think it is more appropriate for there would they mind moving it if they agree it is?

Thank you very much and i am so sorry for any inconvience

Blowfish

Economically it seems pretty ludicrous. Those who earn over 1 million will leave if they can or work less hours.

Raising the rates on holiday homes is just going to discourage wealth from coming in from outside the economy.

I really don't know what he aims to achieve with this.

K-9

poeticseraphim wrote: »

Oh this should this be in the EU section??

Sorry mods i think it is more appropriate for there would they mind moving it if they agree it is?

Thank you very much and i am so sorry for any inconvience

There's a bit of EU in your OP but as it's mainly about Hollande I'll move it to the main Politics board.

AlekSmart

There appears to be a touch of the Joe Higgins's about Francois...

Whilst the Tax-The-Rich slogan sounds all well n good it always comes back to the actual definition of the term "Rich" and the bottom line on the amount of actual "Tax" payable.

The only actual information I have comes via an accquaintance working in the private cruise charter business from a base on the Coté D'Azur.

It appears that in the run-up to M.Hollande's election,those natives with disposable assets such as Yachts have been putting them on-the-market.

The wealthier French are quietly,but,definitely,taking steps to protect their positions and possessions,with no shortage of other European entities being keen to entice them.

One downside which has not escaped the notice of the beautifully coiffed French demi-élite is the arrival of the second tier Eastern European/Russian "new" money keen to snap-up a boating bargain and embrace the Mediterreanian lifestyle.

The Ancien-Régime is finding all of this somewhat depressing in an "Aprés Moi-Le Déluge" kind of way....:(

cristoir

I'd imagine his plans will drive the price of exclusive property in West London up. A lot of people simply won't stay at that rate. London is already the 6th biggest French city as it.

20Cent

Is there any empirical evidence that increasing taxes causes a significant number of rich people to leave a country? Even if they do, won't their businesses be copied or taken over by someone else? Money isn't the only reason people decide to live where they do.
I remember reading about Philip Green the owner of Top Shop, he pays very little in tax. Say he was to leave the UK because he thought the tax was too high. So what someone else can take over the stores and sell clothes.

Good loser

20Cent wrote: »

Is there any empirical evidence that increasing taxes causes a significant number of rich people to leave a country? Even if they do, won't their businesses be copied or taken over by someone else? Money isn't the only reason people decide to live where they do.
I remember reading about Philip Green the owner of Top Shop, he pays very little in tax. Say he was to leave the UK because he thought the tax was too high. So what someone else can take over the stores and sell clothes.

I wouldn't bother chasing 'empirical evidence'.

Earn €1m and pay €750,000 income tax! Seems daft to me.

The_Minister

Good loser wrote: »

I wouldn't bother chasing 'empirical evidence'.

Earn €1m and pay €750,000 income tax! Seems daft to me.

I imagine there would be lower bands.

czx

20Cent wrote: »

Is there any empirical evidence that increasing taxes causes a significant number of rich people to leave a country? Even if they do, won't their businesses be copied or taken over by someone else? Money isn't the only reason people decide to live where they do.
I remember reading about Philip Green the owner of Top Shop, he pays very little in tax. Say he was to leave the UK because he thought the tax was too high. So what someone else can take over the stores and sell clothes.

seems legit

poeticseraphim

K-9 wrote: »

There's a bit of EU in your OP but as it's mainly about Hollande I'll move it to the main Politics board.

Thanks

poeticseraphim

20Cent wrote: »

Is there any empirical evidence that increasing taxes causes a significant number of rich people to leave a country? Even if they do, won't their businesses be copied or taken over by someone else? Money isn't the only reason people decide to live where they do.
I remember reading about Philip Green the owner of Top Shop, he pays very little in tax. Say he was to leave the UK because he thought the tax was too high. So what someone else can take over the stores and sell clothes.

http://en.wikipedia.org/wiki/Tax_exile#Famous_tax_exiles

There is evidence of tax mitigation and people becoming tax exiles yes.

People would not leave their business but take it with them.

If they leave a job or business whomever takes it over pays the same tax and has the same problem. They are not going to spend millions buying a business if they will have a diminished income. It takes value off the business.

If you are saying he would have someone run it for him, he would still pay tax on that income and his business.

Money is usually the deciding factor inwhere people choose to live...in that they choose to live in the nicest place they can afford....in France they now can afford less than they could abroad. They can afford better schools abroad better health insurance abroad. The rich don't like to use state facilities thats why they become rich.

Certain business rely on those with a high disposable income car companies,fashion retail etc. And the car manufacturors.

The tax makes certain jobs and certain business less valuable because they are now less profitable. All tax takes money out of the economy hopefully to put backiin in terms of services and wages to civil servants and in social benefits ...but if you take too much out it contracts the economy and takes value off markets jobs and business...it actually causes it to shrink beyond the sum of capital taken and generates less revenue in the long term.

Socialism is supposed to be about equality....yet their is a lot of Anti wealth rhetoric in France...not simply healthy wealth distribution with social justice and moderate to high taxation ...but real aggression towards many people who simply just made money and probably generate moeny for others....

Those who earn most should pay most....and i agree with that....but it does not seem to make economic sense....

These people are not going to work the same jobs with the same work load for 75% less money..why would they???

Doctors, dentists, barristers etc will leave or do something where they will earn less and get into a different tax bracket..

It encourages people to try to earn and work less..to be less productive.

It is supposed to go towards employing state employees ..but no one is going to keep paying a 75% tax rate for years....if people think anyone would stay in a place paying that because of other reasons they are naive.

France already has a huge civil service....the whole nation can't work for the state.

How are they going to promote economic growth with a tax regime like that?

20Cent

poeticseraphim wrote: »

http://en.wikipedia.org/wiki/Tax_exile#Famous_tax_exiles

There is evidence of tax mitigation and people becoming tax exiles yes.

People would not leave their business but take it with them.

If they leave a job or business whomever takes it over pays the same tax and has the same problem. They are not going to spend millions buying a business if they will have a diminished income. It takes value off the business.

If you are saying he would have someone run it for him, he would still pay tax on that income and his business.

Money is usually the deciding factor inwhere people choose to live...in that they choose to live in the nicest place they can afford....in France they now can afford less than they could abroad. They can afford better schools abroad better health insurance abroad. The rich don't like to use state facilities thats why they become rich.

Certain business rely on those with a high disposable income car companies,fashion retail etc. And the car manufacturors.

The tax makes certain jobs and certain business less valuable because they are now less profitable. All tax takes money out of the economy hopefully to put backiin in terms of services and wages to civil servants and in social benefits ...but if you take too much out it contracts the economy and takes value off markets jobs and business...it actually causes it to shrink beyond the sum of capital taken and generates less revenue in the long term.

Socialism is supposed to be about equality....yet their is a lot of Anti wealth rhetoric in France...not simply healthy wealth distribution with social justice and moderate to high taxation ...but real aggression towards many people who simply just made money and probably generate moeny for others....

Those who earn most should pay most....and i agree with that....but it does not seem to make economic sense....

These people are not going to work the same jobs with the same work load for 75% less money..why would they???

Doctors, dentists, barristers etc will leave or do something where they will earn less and get into a different tax bracket..

It encourages people to try to earn and work less..to be less productive.

It is supposed to go towards employing state employees ..but no one is going to keep paying a 75% tax rate for years....if people think anyone would stay in a place paying that because of other reasons they are naive.

France already has a huge civil service....the whole nation can't work for the state.

How are they going to promote economic growth with a tax regime like that?

That isn't always possible. Will Phil Green open hundreds of top shop stores on some island on the Caribbean and make the same profits. Will the country with the lowest tax have thousands of doctors and dentists will they make the same money?

poeticseraphim

20Cent wrote: »

That isn't always possible. Will Phil Green open hundreds of top shop stores on some island on the Caribbean and make the same profits. Will the country with the lowest tax have thousands of doctors and dentists will they make the same money?

Phil Green will find some way to become a Tax exile .....or what's the point? He will open up stores in china or the US and move business there. It happens all the time. We ..WE were accused of taking business away from America with our low corporate tax rate in the US. It has attracted a lot of investment maybe Phil Greene would come here. But he would probably find at a 75% tax rate business was no longer proffitable or worth it.

Doctors in Dubai are millionaires. Thats not necessarily good for society.

I favour a middle way.

poeticseraphim

The_Minister wrote: »

I imagine there would be lower bands.

75% for all over 1 mill...apparantly

20Cent

poeticseraphim wrote: »

Phil Green will find some way to become a Tax exile .....or what's the point? He will open up stores in china or the US and move business there. It happens all the time. We ..WE were accused of taking business away from America with our low corporate tax rate in the US. It has attracted a lot of investment maybe Phil Greene would come here. But he would probably find at a 75% tax rate business was no longer proffitable or worth it.

Doctors in Dubai are millionaires. Thats not necessarily good for society.

I favour a middle way.

I'd favor a middle way also 75% sounds very high. I'm just asking that if these rich people leave because tax is too high won't whatever they were doing be replaced by someone else? I doubt that tax is the number one consideration in where to live, friends, family, being from there, culture etc play a bigger part. Doubt someone who enjoys life in Paris would be glad to move to some island in the Pacific just to save on tax!
Phill Green can go but he can't take the shops with him, someone else could buy or rent them and sell clothes to fill the gap in the market. Financial traders etc who have very liquid assets can move easily and probably have already. Businesses that provide goods and services in the French market wouldn't be able to move so quickly.
Rules could be made that citizens have to pay tax in the home country otherwise renounce their citizenship if they want to pay tax somewhere else.

Blowfish

It's not just about the incentive to leave the country though, there's also the disincentive to expand or be as productive as you could be, especially for those on the margin of the 1 million mark.

Say I run an export business that pays me 50% of the revenue I generate. Right now I generate 200k a month (2.4 million total) and get paid 1.2 million.

If/when this comes in, with all other taxes included, it bumps my effective tax rate to above 90%. In essence, it's a waste of time for me to do anything that generates more than 1 million for me or 2 million for the company. To reach that figure I can now either take 2 months off every year or just work less hard. Either way, I'm not going to be as productive in the economy as I could be.

ArmaniJeanss

20Cent wrote: »

Phill Green can go but he can't take the shops with him, someone else could buy or rent them and sell clothes to fill the gap in the market.

Its not that simple. The clothes trade is high risk, if you select a bad range of summer stock and/or price it wrongly, you could be busto very quickly.
Or alternatively everything goes perfect and you make a small fortune.

But the likes of 75% tax rates skew the risk/reward ratio - why take the financial risks in the first place if the potential rewards have a low ceiling?

Which is not to say that tax loopholes which see people pay 10% tax is correct either - some happy medium is best as you say.

Black Swan

poeticseraphim wrote: »

Oh this should this be in the EU section??

Sorry mods i think it is more appropriate for there would they mind moving it if they agree it is?

Thank you very much and i am so sorry for any inconvience

Done.

poeticseraphim

Blowfish wrote: »

It's not just about the incentive to leave the country though, there's also the disincentive to expand or be as productive as you could be, especially for those on the margin of the 1 million mark.

Say I run an export business that pays me 50% of the revenue I generate. Right now I generate 200k a month (2.4 million total) and get paid 1.2 million.

If/when this comes in, with all other taxes included, it bumps my effective tax rate to above 90%. In essence, it's a waste of time for me to do anything that generates more than 1 million for me or 2 million for the company. To reach that figure I can now either take 2 months off every year or just work less hard. Either way, I'm not going to be as productive in the economy as I could be.

I agree the main danger is in discouraging those who might be growing a middle sized business and in encouraginng productivity. And these in turn create jobs. Would it not discourage employees from being productive if they knew the business and employer as a whole might be moved into a higher tax band.

I don't claim to know a lot about economics but it skews all i do know ..... when a business makes a profit people don't just pocket it they usually put it back in to invest in infrastucture and growth like you say .....they will not exploit sectors of the economy that are growing and all the jobs you would create and sectors that stagnant are left hanging on when in reality they are not profitable but these less productive companies are given an advantage by the Govt and will hang around despite not growing or creating new jobs.

To say they can replaced by someone else is not realistic..MOST businesses FAIL to be successful is rare....it is a product of talent work timing placement and luck ...if an established business leaves because it is no longer profitable....then it is not profitable for othersto do it either really

It imagines an economic world where it is possible to stay small as a business and be profitable usually it is not...you either grow or fail.....with a few exceptions..


20 Cent ..people who decide to try and make wealth enjoy a wealthy life ...they enjoy a wealthy life in Paris....yes many people do actually go off to god knows where to save tax..BUT the point is they don't have to go to god knows where to get a lower tax rate ..they can relocate to anywhere in the EU and still do business in Paris and pay tax elsewhere ....or they can move to Switzerland etc ..

It is not only little islands offering better tax rates..it's London...the biggest banking sector in the EU...Switzerland, Germany....places where it is easy for EU businesses to go

It also discourages multi nationals from locating in France....it encourages business to grow sectors in other EU countries and keep any French parts under invested and under developed.

It makes France less competitive.

poeticseraphim

Black Swan wrote: »

Done.

Oh thanks

Good loser

I know this is pretty unrealistic politically but if M Hollande made it the law that anybody earning over €1 million per annum could keep the surplus tax free it would increase GDP and the overall wealth of France much more than the measure he has introduced.

(I wonder will there be a rush of footballers, actors and pop stars out of the country to escape the new measures)

General Atomic

Good loser wrote: »

I know this is pretty unrealistic politically but if M Hollande made it the law that anybody earning over €1 million per annum could keep the surplus tax free it would increase GDP and the overall wealth of France much more than the measure he has introduced.

(I wonder will there be a rush of footballers, actors and pop stars out of the country to escape the new measures)

You're seriously espousing trickle-down economics? Taxes levied against the rich benefit all of society, including the rich themselves. State-run health care, subsidised education and modern infrastructure paid for by tax revenue are of great benefit to businesses and people making less than €1m. Top-loading the economy has not been shown to benefit society as a whole; some of the best places to live in the world have the highest tax rates.

If you want to see an example of trickle-down at work just look at the U.S; the middle class is suffering and shrinking while the rich hoard ludicrous sums of money. Massive companies are sitting on huge cash reserves and CEOs are walking away with insane compensation. Can you honestly say that everyone has benefited from that?

Good loser

General Atomic wrote: »

You're seriously espousing trickle-down economics? Taxes levied against the rich benefit all of society, including the rich themselves. State-run health care, subsidised education and modern infrastructure paid for by tax revenue are of great benefit to businesses and people making less than €1m. Top-loading the economy has not been shown to benefit society as a whole; some of the best places to live in the world have the highest tax rates.

If you want to see an example of trickle-down at work just look at the U.S; the middle class is suffering and shrinking while the rich hoard ludicrous sums of money. Massive companies are sitting on huge cash reserves and CEOs are walking away with insane compensation. Can you honestly say that everyone has benefited from that?

Not advocating it as such. Just speculating as to whether it would work.
It's not the case in U.S. The proposal would be that only income over the threshold would be tax free. Taking the million as being about 30 times the average industrial wage. Those people avoid taxes wholesale anyway. Think of all the people trying to find ways of increasing their income to the taxman so that they reach the threshold. The scams these would reveal to the taxman could generate a lot of extra revenue.

All in all not a bad idea. Should be studied.

Here is an update:

http://www.bbc.co.uk/news/world-europe-20864114

France's constitutional council has struck down a top income tax rate of 75% introduced by Socialist President Francois Hollande.

Raising taxes for those earning more than 1m euros (£817,400) has been a flagship policy for Mr Hollande.

The policy angered France's business community and prompted some wealthy citizens to say they would emigrate.

Mr Hollande's government said it would rework the tax, due to take effect in 2013, to meet the council's complaints.

In its ruling on Saturday, the Constitutional Council said the new tax rate "failed to recognise equality before public burdens" because, unlike other forms of income tax, it was to be applied to individuals rather than households.

For example, that meant a household in which one person earned more than 1m euros would pay the tax, but a household in which two people earned 900,000 euros each would not have to pay

AlekSmart

poeticseraphim wrote: »

Phil Green will find some way to become a Tax exile .....or what's the point? He will open up stores in china or the US and move business there. It happens all the time. We ..WE were accused of taking business away from America with our low corporate tax rate in the US. It has attracted a lot of investment maybe Phil Greene would come here. But he would probably find at a 75% tax rate business was no longer proffitable or worth it.

Doctors in Dubai are millionaires. Thats not necessarily good for society.

I favour a middle way.

I was in Imperia,Italy recently and came across P Green's Motor Yacht "Lionheart"...seems he's recently sold it as it was proving somewhat cramped and a larger vessel is required....Good man Phil,sez I....great news for some Boatyard someplace,yes ??

However,just to prove wealth can't always keep the wolves from your door,I found this account of Phillip bashing worth reading...

http://www.socialistworker.co.uk/art.php?id=29301

You can't beat an oul handmade placard !!