To Russia With Love?
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.
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Comments
Having spent February time in both Moscow and Paris, I can’t imagine why he’d even consider Russia. Hell, year round, the difference in food alone is enough for me to put Russia on the bottom of my list.
Oh, yes… I do love Russia, but I suspect that it’s for all the wrong reasons. 😆
The US government decided to tax any significant overseas income of its citizens. Even a dual citizen who lives in his other home country must continue to pay US taxes (minus foreign tax credit) for income earned outside the US. Most other coutries–even many totalitarian or socialist countries–don’t commit this extraterritorial reach of taxing power.
And as with all taxing decisions, the government did not properly foresee consequences. Now many, if not most, major foreign banks are reluctant to give accounts to Americans, because the US requires those banks to commit to burdensome reporting laws. The US government can do this, it feels, because all of these banks also operate in the US in some way. (See the payments recently forced out of Swiss banks for not adequately reporting American customers to the IRS). When US citizens (even dual citizens) can’t bank in another country, they can’t practically move to that other country. Thus the US has acted to limit the free movement of its citizens. The taxing decisions of the US in these cases may not be unconstitutional, but they are in violation of the notion of liberty.
Just imagine if, over the course of our history, immigrants from England, Ireland, Italy, Germany, Russia, China, Mexico, etc. had been forced to pay taxes to their home countries when they came to the US and prospered. We would have learned in schools about the unfair taxation and economic strangulation of these home countries.
I am glad you raise this as it Hits home on many fronts.
In regards to US citizens they have high demands on their Govt eg the Miliary saving them .Stupid dogooders cause deaths to Seals having to rescue the shits in Afghanistan as in a recent case. That Seal cost the US taxpayer 500,000 to train . So the dogooders should have to repay.
I am not a fan of dual citizenship & I wonder if these will hold under hostilities. Why cannot people make a choice? I would find it constricting to have 2 masters & only have time to rant against one .But it is what it is .
Like many other former capitalist countries, Russia adopted a low flat tax. (Actually, nobody pays income taxes in Russia anyway, but that’s a different story.) Russia is not exactly a modern free society, but other countries, like Estonia or the Czech Republic also have a flat tax system, and they are in much better shape socially and politically.
Yeah, my friends in the former Soviet Bloc always remind me that they know all about the dangers of socialism and cronyism.
It certainly is nice to spend other people’s money!
It generally works for awhile until and the prof mentioned, that money is gone and then so goes the middle class thus reducing the rest of the populace to pauper status.
The seeds have been planted and no white knight is in the wings…
I am quite pleased to see this as I made a fun remark on a sporting blog a month ago that French Athletes will be trying not to win because if they do & receive € galore they will be taxed 75%.
I admit I was targeting the ONE annoying Frenchman but all the Americans took his side. OooH ooooh they decried – I was spoiling the blog with politics.
I was kinda pleased with my post heading though – Depardeau est departee .
shouldn’t this be titled “To Russia with Francs”? 🙂
The Progressives will not see the exodus of the wealthy as a problem but only as further impetus to continue working for a One World Government.
What Mr. Depardieu is doing is a redistribution of income that favors the taxpayer.
Wait til Putin wants his money. Then he will be Gerard deToast.
Frying pan to fire seems a fair analogy.
Chile might have been a better choice if Newt is right.
…but Depardieu may be the type of socialist/communist ideologue who is happy with that kind of political system, except when it costs ‘me’ too much – A Communist of Convenience.
Hope he doesn’t cross his new bud Putin, the KGB-trained undefeatable politician. That can be costly, physically and materially.