France’s Hollande Gets Court Approval for 75% Millionaire Tax
bloomberg.com
bloomberg.com
"Hollande says the 75 percent tax he plans to impose would hit about 3,000-3,500 people and raise around 200-300 million euros a year."
http://www.reuters.com/article/2012/04/10/us-france-election...
The tax is going to hurt a few super high earners such as a few soccer stars, a few pop stars, some investment bankers etc. The figures I have seen are more at 1,000 than 3,000.
So, it will be harder for PSG to attract the best soccer players of the world, and some CEOs, investment bankers etc. will take wage cuts or move, but apart from that I doubt it's going to have any noticeable effects. It's certainly not going to lead to mass exodus of talents from France.
Edit: And during most of the 60s, the 70s and all the way up to 1981 the US had a 70 percent marginal tax rate which kicked in at much lower thresholds, even when adjusted for inflation: https://docs.google.com/viewer?url=http%3A%2F%2Ftaxfoundatio...
American hockey players (or coaches) playing for Vancouver often choose to live at Point Robers to avoid paying Canadian taxes.
Soccer players have to live where they play and their teams have to be located somewhere too. So taxes are paid based on that location.
HOWEVER:
Most soccer players negotiate post-tax income. So rather than them earning less, their employers will end up paying them a lot more to garantee that income.
Also things are more complicated for French citizens in particular, because Monaco and France have a tax treaty (dating to the 1960s) aimed at making it harder for French citizens and companies to use Monaco as a tax haven. Essentially Monaco agrees to tax French people/entities at the current French tax rates, rather than the usual Monaco rates, in a range of situations that fit the heuristic of using Monaco as an address of convenience (vs. bona-fide living / doing business there).
But the Swiss rejected it, probably because the government told them to vote against it (the gov always hands out brochures "recommending" how to vote). I suppose they got manipulated by the classic manipulation-by-fear strategy: "If you don't let our CEO's rip you off, we'll destroy your economy by going elsewhere." Of course they found their way of communicating this only between the lines (and not explicitely), which makes it very powerful b/c you can't call their bullsh#t.
We need more education.
Socialist politicians prey on the wealthy with support of the majority. It's a dangerous game to be playing. Class wars are coming. When the wealthy must defend themselves, they will shield behind corporations, the overlords of the populace.
You can see it. Human nature is causing societal drifts, leading to political shifts. Democracy is battling oligarchy, and oligarchy is winning.
A revolution is coming.
Can you illustrate us?
I am from Spain, in 1936 we had a civil war and a million people dead. The country got devastated for decades. And the wealthy, which was much better prepared and organized, won.
What you call plutocrats are only a very small part of the population. I also have family from eastern European countries, and communism was the worst thing that happened to them. There they had plutocrats of the public with more power than any capitalism could give(they could ruin your life or your families in an instant as everything was controlled by a selected few).
Previous results are not indications of future success.
It doesn't require much of a cognitive leap to understand that a healthy, educated, and stable populace comes at a price. Is it possible that such inflammatory tax gestures are more a statement against the perceived predatory corporate vampirism than practical income generation means?
Treating companies them as autonomous, indivisible entities just plays into an "us vs. them" narrative, complete demagoguery. We should remember that everyone involved here is a person, and most of them aren't rich. When we take that into account it becomes clear why targeted taxes on salaries, on consumption and on capital gains might be a better option.
http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United...
Even this France law apparently only affects "wages" — not sure what that means in France but in the US it wouldn't cover long-term capital gains. BTW, when did millionaire start to mean someone that makes over a million dollars a year rather than has that in assets?
Around 2010. I remember this coming up when a new tax bracket was briefly proposed in the U.S.
http://themonkeycage.org/2010/12/05/the_shifting_meaning_of_...
The massively wealthy can afford to wait a couple years for tax laws to revert. And they don't mind waiting - the general public, unaware of reality, believes that the rich are paying more than their fair share of taxes.
Meanwhile, new tax incentives and loopholes are created all the time, in every country. You won't know about them, but you can be damn sure that the expensive CPAs do.
It will very interesting to see how much extra tax it will bring in and how it effects the decision making of the big French companies in regards to salary incentives.
Indeed. Just like the Netherlands where 2013 saw the introduction of the "one time crisis tax" (eenmalige crisisheffing) which constitutes a 16% tax on wages, including bonus, over EUR 150K.
Now, for 2014, the "one time crisis tax" regulation has been prolonged. One time, promise! ("Eenmalige crisisheffing eenmalig verlengd")
Or, get your salary reduced to just under the insane tax limit. Take the difference in some other way(Stocks, Real estate, Gold, vacation funded by the company etc etc).
Except the difference that should be paid to you won't be paid in a technical definition of a salary. It can be paid as a reward, bonus or some new incentive system.
Works like a charm.
Historical US upper bracket tax rate: http://s158.photobucket.com/user/OnlyObvious/media/Tax_Rates...
Reagan traded eliminating the tax shelters for the lower tax rates.
I think the something is better than nothing argument already shows a sign of defeat.
Cheating and evasion of taxes is the same as over taxing, because please note when X set of people don't pay taxes, you have to recover the loss from Y set of people by taxing them a little extra. If the X had payed at the first place, the original tax rate would have been lower, and every one would have to pay less.
Of course if he ever needs money he can borrow as much as he wants and spend it tax-free! The salary he pays himself is completely irrelevant to his ability to spend.
A simple solution is fair* "flat" (graduated) tax every year on both balance sheet (assets and holdings) and income sheet. An inheritance tax would be unnecessary, because balance sheet reporting would handle it. One page form, no special amendment shit for megafarms, special credits and other edge-case crap. Also to make things fair across-the-board, tax companies and trusts in a similar manner. And yes, people would continue trying gambits. It would never happen of course unless people get organized and insist on it.
No more hideouts for the ultrawealthy while everyone else subsidizes services they use.
* Poor pay less down to 0% for 2X minimum wage, % levels out at some upper-middle class level and stays constant.
In Scandinavia, we tried top marginal rates ~100% for a decade or two. :) Actually didn't work too badly, but the political mood changed, and rates were gradually lowered, now to a mere 60%. Some good effects of the cuts, some bad effects.
But if the State pushes far enough, and hard enough, people will eventually lash out and strike back in one form or another. I think the historical record shows that quite clearly. No "objectivist fantasy" (whatever that is) needed.
Also, I certainly hope that people here understand how marginal tax rates work...
While I think this tax is ridiculous, I think those kinds of counter-arguments are even more ridiculous.
While it's a gross simplification, it is still interesting to think that 200-300 million is the price tag that the French government is willing to put on it's future generations of CEOs and successful companies, which is disappointing to say the least.
And like many others have stated, this may just be for political points. I would bet a large group of this demographic has no problem deferring salary for the next two years (thought it will be interesting to see if the tax is extended).
You are not talking about CEOs. You are talking about normal people.
Normal people can't leave the home when the loan is not paid. People who earn millions dollars a year can leave the country and live in Brazil in Winter while taking his private jet like normal people take a car.
It is Europe we are talking about. You could live in the UK, Switzerland, Germany, Italy, Spain, Portugal, Turkey or Greece without problems.
In fact, most of the CEOs I know do exactly that.
The wager that Hollande is making is that the value of living and doing business in France is worth the cost being assessed (in the form of tax). I don't think it's apparent yet whether or not he's right.
"...He has been an official resident of Néchin, Belgium since 7 December 2012.[13] French prime minister Jean-Marc Ayrault criticised his move.[14] On 15 December 2012, Depardieu publicly stated he was handing back his French passport.[15][16] On 3 January 2013, Russian President Vladimir Putin signed an Executive Order granting Russian citizenship to Depardieu.[17] Depardieu soon returned the favor by attacking Putin's critics.[18]..."
I wonder who the French will tax next...
Not to mention that exactly the same is the problem with capitalism -- you run out of "other people's money" and you get an overproduction crisis.
In socialism, if that thing existed, maybe.
In capitalism you don't produce what "people want".
You produce what you can SELL.
When you cannot sell what you have produced (e.g because people cannot afford to buy it anymore), and you have tons of investments in factories, production capacity and materials being underutilized, you have "overproduction".
What sells and what people want are highly correlated, which is what capitalism relies on. Yes it's not perfectly correlated and maybe there is a better system, for the most part it works.
Congratulations Mr. Hollande, you just created a fabulous tax loophole to get corporate tax down to 5%. Keep up the good work.
Those who play these games call it "tax avoidance" or simply "tax planning" when it is done legally.
Tax is one of those areas of law where the "spirit of the law" actually has meaning. For example, in nearly all of the convictions for the loss-harvesting tax shelters, the form of the underlying structures was legally sound under tax law--but the nature of the transactions was not and resembled tax evasion schemes. SCOTUS upheld these convictions. The same is generally true of various other similar tax shelter convictions in England and France.
By what metric(s)? If you're talking about GDP, Britain is now managing significantly better growth than France and expert predictions seem universally agreed that it will continue to do so next year.
As point of curiosity, though not necessarily claiming any causal relationship, the top personal tax rate here in England came down from 50% to 45% earlier this year, after the new 50% rate introduced just before the end of the previous government turned out not to raise as much extra money as predicted. Meanwhile, French GDP growth has stagnated or reversed since mid-2011.
http://en.wikipedia.org/wiki/Income_tax_in_the_United_States...