Continuing efforts to enact French “supertax” likely to prompt exodus of nation’s wealthy
Following his acquisition of a Russian passport, French actor, Gérard Depardieu, spent most of yesterday being courted by some of Russia’s most powerful names. Among them, President Vladimir Putin.
Depardieu has been an outspoken opponent of the obscenely high proposed tax increases that France’s new Socialist-led government has been trying to implement since the election of Francois Hollande. Depardieu was reportedly in Russia mulling the possibility of a change in citizenship to avoid the French tax increases.
Initial attempts at raising taxes to ultra-high levels were rejected by the courts, but the French government remains largely undeterred. (Emphasis supplied)
France’s Socialist government is attempting to raise the tax rate above income on €1 million ($1.3 million) to 75% from the current 41%. The country’s highest court struck down the plan, but Budget Minister Jérôme Cahuzac said on Sunday that the government is reworking the law so the high earners will still pay an elevated rate, and longer than the two years initially imagined.
Still the highly publicized flight of figures like Mr. Depardieu has the government worried. Mr. Cahuzac said the government isn’t planning any more tax increases for the next few years as it tries to offer stability to companies and taxpayers following the exit of high-profile citizens.
Mr. Cahuzac said between 600 and 800 wealthy French people leave the country each year, although he said the figures for 2012 will only be available in late 2013, after people have filed their tax forms.
Although Mr. Depardieu has had his fair share of personal follies, his economic sensibilities are right on the mark.
Depardieu’s actions of late are a microcosm of what will happen in any country that seeks to put too much of the tax burden on its top income earners.
Once the majority of a country’s wealthy have fled, the funding obligation will fall to the nation’s middle-class. At that point, every nation, no matter how powerful, will buckle under the weight of its own debt.
The United States should look for lessons in the actions of the French and Mr. Depardieu, and our decision-makers must contemplate crafting policy that can shift us away from a similar fate.
True, it might be nice to see some of our nation’s so called “celebrities” on a one-way ticket out of here. However, in the interest of maintaining a stable economy, I’d rather have most of them stay.