Give Me Your Tired, Your Poor French Millionaires
So France’s new Socialist president wants to soak the rich? My message to French job-creators fleeing the nouveau régime: Mississippi welcomes you.
The first European settlement in Mississippi, Fort Maurepas, was established by French explorateur Pierre Le Moyne d’Iberville in 1699. With the recent announcement by France’s Socialist president, François Hollande, of a tax plan to soak the rich, should Americans and others get ready for another French emigration, not of explorers but of entrepreneurs and other employers?
Because that’s what may be about to happen — and it could happen to the United States if Barack Obama and the Democrats follow in Hollande’s footsteps.
You might think that the purpose of the new and higher French taxes was to significantly affect the deficit. But it wasn’t. Rather, writes Michael Birnbaum of the Washington Post, who notes that the higher income tax "raises too little money to make a dent in France’s funding needs," the Socialist tax plan "is more of a political symbol than an economic measure. It will help give Hollande political cover."
Perhaps Monsieur Hollande’s leftist political base may be placated by skyrocketing tax rates on job creators, but businesses and investors say the actual, as opposed to the symbolic, economic effect will be to reduce growth — a tall order when one considers that economic growth this year in France is predicted to be a paltry 0.2 percent as it is!
Many Americans, especially Republicans and other critics of Obama’s economic policies, believe the Democrats’ proposal to increase the individual income tax by 10 percent on top earners; to increase the capital gains tax; to collect payroll taxes on investment income; to tax employers who don’t provide their employees with health insurance by $3,000 per employee; to create a variety of other new taxes related to Obamacare and to increase taxes on the U.S. oil and gas industry by $4.2 billion a year, will hurt the U.S. economy. Even former President Bill Clinton has warned that raising taxes in a bad economy is a mistake.
The French tax increases are, of course, far larger than those proposed in the United States; not only would those making more than $1.23 million a year be taxed on all gains over this amount at a 75 percent rate, but taxpayers who make less than $100,000 per year would be taxed at 48 percent. And that’s after already paying a 19.6 percent sales tax or VAT!
If you think the French are taxing everything that moves, you’re not far off.
Indeed, Hollande’s new tax policy levies a 3 percent "one-time" wealth tax on assets held by individuals (foreign or French) in France, when the value of the assets equals more than 1.3 million euros, or about $1.75 million. Corporate taxes will be increased in a variety of ways, such as a 3 percent tax corporations must pay on the dividends they pay out to their shareholders. And new taxes will be levied on financial transactions, on lending institutions, and on oil and gas companies.
France’s neighbors have adopted different strategies to try to regain economic growth and return the costs of government services to sustainable levels. They have avoided large tax increases.
Unlike the Socialist government in France, most European countries not only think higher taxes aren’t productive in resolving fiscal issues but would reduce growth or deepen their economic blues. A few actually foresee another negative for their French neighbors as a result of these tax increases: a flight of wealthy French citizens, including some non-citizens residing in France (as they generally will be subjected to the new taxes) and French corporations or their suppliers.
And indeed, this seems to be happening. The Financial Times reports that more French people are considering moving out of the country. British Prime Minister David Cameron even declared that Her Majesty’s Government will "roll out the red carpet" for French businesspeople fleeing the big tax increases.
And Hollande can’t be happy about the reported comments of French business leaders. The head of Medef, the French employers’ federation, said earlier this summer that the new higher tax regime will "dry out the economy" at a time when "company profits and orders [are] tumbling and investments [are] frozen."
The French are asking: "Will the Socialists’ ‘soak the rich’ regime work as the left hopes, or will it hurt growth and make job creation much harder, as many expect?"
Their neighbors are asking a parallel question: "Will their gigantic taxes drive French citizens and non-citizen residents to leave the country to avoid being soaked?"
Switzerland is already preparing. "It’s open hunting season on the wealthy in France," Francois Micheloud, a partner in a company that helps foreigners relocate to Switzerland, told Bloomberg news. "The number of Frenchmen asking for assistance has tripled."
My name, Barbour, is an old French Huguenot name, and my great-great-great-great grandfather Louis LeFleur, a Frenchman, founded a trading post around 1800 that developed into Mississippi’s capitol, Jackson, a quarter century later.
I wonder if we Barbour boys ought to set up a business to attract wealthy Frenchmen and successful businesses from France to Mississippi. As a low tax, pro-business state with a regime of rational regulation, we could roll out the red carpet and run up the tri-color over Fort Maurepas. Bienvenue, mes amis!