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Comment by flexie | Hacker News Reader

Yes. The tax is only on income exceeding EUR 1 million (USD 1.4 million). This means that the people usually associated with high income, such as medical doctors, lawyers, accountants, business owners, CEO's of small and medium sized companies etc. are not affected at all or only for a small part of their income.

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.

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One can remember as when introducing American AMT[1], it was about 155 richest families only. Now about 4 million households are paying it. It's much easier for the government to take money than to stop doing so.

[1] https://en.wikipedia.org/wiki/Alternative_minimum_tax

I agree that governments tend to increase taxes more than they lower them. And yet, in 1958 the US had a tax rate of 81% that kicked in at 140,000 dollars (which in today's money is lower than France's 1 million euro threshold). And couples earning more than 400,000 dollars had a 91% marginal tax.

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...

A lack of an exodus does not indicate a lack of new interest. Now instead of investing in France, for example, some investors may invest elsewhere. Football stars may play for other teams, and celebrities may decline French endorsement deals. Corporations in France pay all of those people high salaries because of their value on the international labor market for their respective positions. By effectively reducing that rate, France forces those corporations to either increase salary significantly or lose some future prospects. Football teams, large corporations, and brands may all decline to raise salaries, and thereby France may see a reduction in culture (brands, football) and FDI (loss of foreign interest in investment).

This is personal income tax, for physical people living in the country. Investors don't need to take actual residence in France to invest in this or that company, so that's not really going to change anything. Any celebrity worth that money is already living in Monaco (or similar tax haven). The only people affected by this are millionaires who, for some specific reason, are forced to live in France: footballers and very few others. Hence why revenue projections are actually quite low.

Don't most sport stars live at (or at least have their residence at) Monaco or (insert low income tax country here) where the taxes are close to 0%?

No. That's only doable if you do individual sports such as boxing, tennis, golf, where you are free to take residence anywhere, or if you play for Monaco FC ;-)

Surprisingly, not always.

American hockey players (or coaches) playing for Vancouver often choose to live at Point Robers to avoid paying Canadian taxes.

http://en.wikipedia.org/wiki/Point_Roberts,_Washington

Fascinating place, Point Roberts. I've read a number of people from surrounding localities go there for cheap goods (Canada has 12% VAT, US does not). Also, I heard, popular with witness protection since you have to cross the border control to drive in there (which could be a problem for somebody who is a felon).

Many Tennis or Formula 1 stars do. Money earned abroad and individual sports.

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.

If they work for a French soccer team, that just makes them cross-border commuters, which typically means you're responsible for taxes in both countries (unless a tax treaty between the countries harmonizes them). A Monaco resident working in France still has to pay French income tax on his or her French salary & bonuses. Living in Monaco may be a way to dodge taxes on advertising income if they do endorsement deals, though.

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).

There was a very similar vote in Switzerland, recently: http://www.theguardian.com/world/2013/nov/24/switzerland-vot...

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.

How is that vote similar?? What was proposed in Switzerland was a salary cap, not a tax. There is not such a cap in France, nor anywhere that I heard of.

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