Various news organizations have been reporting an exodus of the superrich from France — often buying homes in England or surrounding countries to avoid the expected 75 percent tax rate proposed by the Socialist government of President François Hollande. While the rate would apply only to those making one million euros a year or more, I view it as a mistake. I admit that I tend to have great reservations about heavy tax hikes during economic crisis. We have debated the value and potential harm of such hikes on this blog. However, a 75% rate is in my view insane. As rational actors, top earners are likely to simply leave the country as they are doing. Hollande came into office on a wave of sentiment to soak “Les riches” and Hollande himself proclaimed “I don’t like the rich.” It is a bit too Robespierrean for my tastes as an economic policy.
Only around 30,000 people (out of 65 million) in France would be subject to the greater tax if it is approved. While that may seem to mitigate the concern over its social impact, it would also result in the collection of a small fraction of the needed revenue — even if they stay to be taxed. What is all does, however, is create the impression that France is hostile to top earners — a dangerous image for a like France with a portion of the economy catering to high-value estates and tastes.
Hollande insists that the 75 percent tax is “sending out a signal, a message of social cohesion.” Perhaps, but it also (in my view) sends out a message of economic chaos. The tax is a virtual invitation for the top earners to flee France for England. The result could be a modern remake of the “Tale of Two Cities” with London enjoying an infusion of capital and investment as wealthy French families shift assets away from Paris.
What do you think about a 75 percent tax?
Source: NY Times
Here’s another way to “balance the budget” [sarcasm alert]
Farmers lose tens of thousands because it’s cheaper than litigating.
http://www.naturalnews.com/036716_small_farmers_bank_secrecy_theft.html
Federal government now ruthlessly stealing thousands of dollars from small farmers’ bank accounts via ‘Bank Secrecy Act’
Tuesday, August 07, 2012 by: Jonathan Benson, staff writer
If you run a family farm or other small business in which you regularly make large cash deposits at the bank, you could be in violation of a little-known federal law called the Bank Secrecy Act. Making regular cash deposits of any amount, in fact, could land you in the crosshairs of government tyrants who, according to CBN News, have already seized tens of thousands of dollars from family farmers whose only “crime” was depositing their hard-earned cash in their bank accounts.
When it was first passed by the U.S. Congress back in 1970, the Bank Secrecy Act was intended to combat money laundering and other criminal activity by identifying so-called suspicious depositing activity. This law requires financial institutions to keep rigorous documentation of all individual cash deposits exceeding $10,000, which is considered to be suspicious, and submit this information to federal authorities.
Many criminals; however, allegedly began trying to evade this law by spreading out their individual cash deposits to numerous bank accounts in order to keep them below $10,000, which prompted the federal government to amend the law to prohibit individuals from so-called “structuring” their deposits. Anyone who deposits even moderately-sizable sums of cash, in other words, becomes a potential target under this unreasonably vague and all-inclusive law.
This is where the Sowers and Taylor families, both of Maryland, come into the picture. According to CBN News, both families operate small farms in Maryland, and both regularly make cash deposits at the bank. Both families were also recently targeted by the Feds for simply following the advice of bank tellers who advised them to avoid laborious paperwork by spreading out their individual cash deposits in order to keep them below the $10,000 threshold.
In the Sowers’ case, business at their independent dairy farm, South Mountain Creamery, has been doing so well in recent years that cash flow began to creep up into the “suspicious” territory. Randy Sowers, owner of South Mountain Creamery, decided to take the advice of his local bank and spread out his deposits in order to keep them below $10,000. As far as Sowers was concerned, there was nothing illegal or wrong about cooperating with his bank’s counsel.
But in February of this year, federal officials targeted Sowers and his farm, and in the process seized roughly $70,000 in financial assets. In the end, Sowers decided to simply settle the case with the government rather than contest it, and like a pack of ruthless pirates, the government agents that targeted Sowers decided to keep $30,000 of his money for absolutely no reason.
An almost identical situation occurred on the other side of Maryland to the Taylor family, which had $90,000 of its hard-earned cash seized by government officials. Like the Sowers, the Taylors spread out their deposits in accordance with their bank’s advice, and became a target for potential criminal activity. Even though the Taylors committed no crime, federal thieves ended up keeping about $45,000 of the Taylor’s earnings that had been seized.
“We found out since that there’s a lot of other people this has happened to, but they all just kind of crawled into a hole and didn’t say anything,” Sowers is quoted as saying to CBN News about this massive government theft racket. “And then the government can go ahead and get away with it because nobody says anything.”
Most ordinary Americans, including farmers, do not have the financial resources to fight government tyranny, so they simply accept it
Sowers says he tried to fight back against the ridiculous charges levied against him, as his cash deposits were clearly not in violation of a law that is intended to target actual criminals like money launderers and drug dealers. But because of the enormous expense involved in fighting back, Sowers decided to simply settle rather than seek justice. And many others like him, including the Taylors, have reportedly taken a similar route as litigious dealings can be unbearably costly and time-consuming.
As far as the Bank Secrecy Act is concerned, the federal government is now openly abusing this law to tyrannize honest, hard-working Americans. In mob fashion, these federal kingpins are taking advantage of every possible opportunity to shake down farmers, small business owners, and others who make cash deposits, accusing them of violating a skewed law that technically every person could be conceived as violating on a regular basis.
“It’s so broad now that they can criminalize anyone,” said Liz Reitzig, co-founder of the Farm Food Freedom Coalition (FFFC) and visionary behind the Raw Milk Freedom Riders campaign “(These farmers) are providing economic prosperity to their rural communities. They’re creating jobs. They are producing something for the American economy. And they’re the ones who are targeted.”
Be sure to read the full CBN News report on the Sowers and the Taylors here: http://www.cbn.com
@”Me”: I said losing them wouldn’t be bad; but it should be obvious, in the context said, I meant if they left voluntarily.
It is amazing to me how stubbornly people in the 99.95% cling to their hopes of being in the 0.05% (30K out of 65M) despite decades upon decades of never being anywhere remotely close, not even to the 5%. How much proof do they need that they aren’t going to get lucky?
if the 0.05% want to leave because we tax them too much, and they do not want to reinvest their earnings to avoid that tax with perfect legality and to great acclaim as REAL job creators (instead of the sterile investments they make that create zero jobs), then let them go. They aren’t creating jobs, they aren’t innovating, they aren’t doing anything to help anybody except feathering their own nest and ruining the humanity of their children by teaching them selfishness and money grubbing.
Phuck ’em. We will do fine without them. In the USA, that would be about 150,000 people. Let ’em go, and lock the door behind them, and do all we can to prevent them from financially benefiting from American society. Believe me, we will do fine without them, and there are ten times as many people that would be happy to occupy their niche AND pay the taxes.
Anytime somebody threatens to quit, you should ask them to do so immediately. There is always somebody else willing to take their place, earn their wages, and comply with your demands.
It is the reason the rich will never REALLY go “Galt,” because they KNOW they aren’t “earning” their income, they KNOW there are plenty of others that can do what they do, they KNOW that if they gave up their high-paying economic niche, somebody else (or a hundred somebodies) would jump in to compete for their throne and they would NEVER get it back.
Let them piss, moan and whine, phuck ’em, and if they want to take their ball and go home, let ’em, just make sure they do not sneak back in the side door.
Can’t agree. Show me when the one percent will be threatened with a 75 percent tax in the USA.
And they call themselves socialist in France. The horror…..! OMG!!
Never in America.
The banks own America. The people will strike in France. When did America have a national strike for political reasons? Ever? Never!
It strikes me that the proposal is not economic policy so much as social theater. Let’s see how it plays out.
Bron,
Warning snart. Watching your apparent brain function based on what you write is truly amazing. Do you have a bowl of analogies wrapped in balls and pick them at random.
Me,
Although less randomized, your posts are amazingly, coherently conservative. Are you reading from their bible?
Two snarts a day will keep the idiots at bay.
I said that.
—————————————————
Publishing and claiming a new IMHO-type of acronym:
JPVT Just Plain Vanilla Thanks
An expression for prefering sometbing without all the bells and whistles.
Blouise gets first use rights.
wow…the level of anger and envy on this thread is palpable. It’s what I always find amusing with “progressives”. The wealthy become “those people”. Without a name and face those people become expendable.
This one is my favorite:
“Losing 30,000 rich people would not be so bad. If the 75% tax would not have made up much of the budget, getting rid of them won’t either. Force them to give up their businesses, too. From a business sociology point of view, that opens up niches for others to occupy, hopefully many others splitting that now-available pie, and that spreads the wealth.”
Round ’em up, take their property, redistribute. From each…To each…
Progressives my ass…Lenin (and Stalin) would be proud comrades.
“It’s what I always find amusing with “progressives”. The wealthy become “those people”. Without a name and face those people become expendable.”
What I always find amusing by those whose nose is up the butts of the rich is that is how expendable and anonymous anyone without money or fame is to them.
I’ve been a bit out of touch this week and late to this thread, but so far I’ll have to go with a “what Tony said”. Government is not a business and they have a name for trying to run one like a business: corporatist fascism. The Laffer curve has nothing of utility to to add to the evaluation of and implementation of good governance.
I volunteer to move to France and pay 75% tax on my income over one million dollars. What kind of jobs can I apply for there that pay that much?
Let’s hope for France’s sake she doesn’t go after businesses as harshly. That would be catastrophic. And, let’s hope this isn’t just the beginning of the confiscation.
I know many here have good reasons to believe the ultra rich should pay more but consider this. I have a close relative of mine actually left the work force because her husband and she have the highest marginal tax rate possible here. She looked at the total amount of wages she could earn, subtracted her payroll taxes and the likes, added commute costs, added clothing, travel, education expenses and the other sundry costs and what was left was not worth the headache to work a demanding job. Easier jobs paid less but the tax rate was the same and it was even less an incentive financially. So she takes care of herself and her family at home.
So, no taxes are earned from her wages.
I wonder if it will happen that some of these French Gentry will move not only their selves, but their company with them. Not good for employment I would say. I personally don’t need a million euros a year to be at peace with the world but some might, and I suppose many vote with their sneakers.
@Frankly: The issue isn’t whether it is “correct,” the issue is about whether the Laffer curve says anything meaningful.
I assert it does not: It should never be the objective of the government to maximize tax revenue! It is not a business, the focus is not some bottom line profit.
If it were, then communism is the answer, just confiscate everything.
The Laffer curve, in different form, is used to optimize pricing in business; there is a point of maximum profit margin. If you raise your price your profit margin per unit will increase, but your total units sold will typically decrease, so the question is what is the price that maximize profit? It looks like an upside down parabola that intersects the X-axis at the price of zero profit margin on the left, and the price of zero sales on the right, and the ideal price is at the peak in-between those two values.
My point was that maximizing profits is not necessarily the point of taxation, high taxation can be used as an incentive for businesses to reinvest their excess revenue instead of taking it as profit.
Finally, look above at Mespo’s post; we already proved between 1952 and 1963, with 91% income tax rates, that the rich did not stop their earning at all. So the Laffer curve as drawn is completely misleading, even when people could only keep less than 10% of their earnings they continued to increase their earnings (in truth, they couldn’t help themselves, because contrary to the mythology, the rich do not choose to earn, they are owners of profit-generating machines they cannot really turn up or down at will; and if the rich take the year off their machines will keep on chugging along).
The Laffer curve is misleading because it suggest the peak is somewhere in the middle; but it is a bad guess and pseudo-science. It is one guy’s doodling bad guess that has been seized upon as if it were a proven economic theorem. It is junk science contradicted by actual fact.
An excellent and enlightening thread, thanks for all of the info.
TonyC: “@bettykath: As a general rule, I ignore anybody complaining about “entitlements.”
***
Right. They will probably eventually rue their shortsightedness, or take the ‘entitlement’ when they can.
puzzling:
this happened in England in the 60’s I think, it was called the “Brain Drain”. France will lose all or many of its achievers/movers and shakers.
I guess France is ramping up socialism in a big way. I wonder how long it is going to take to ruin the wine industry? Which will be hurt with the tax on property. I wonder how many jobs that will cost.
When you start eating the seed corn, no good can come of it.
Tony C.
No, I think the laffer curve probably is correct. The “problem” is that there are no numbers associated with the curve. It probably is true that at some point raising the effective rate would reduce the revenue generated. The curve also suggests that lowering the rate past a certain level will reduce the revenue. The curve, as drawn on a napkin, (LITERALLY – IT WAS DRAWN ON A NAPKIN!) gives no clue where those breaks are.
So lets look at the results of the tax rates here in the US. Reagan tax cuts – huge DECREASE in revenue. Bush tax increase – increase in revenue. Clinton tax increase – huge increase in revenue. Bush tax cuts – crushingly huge decrease in revenue!
If these clowns really believe in laffer they would have to agree that our current rates are too low. But they don’t really believe in it – its just BS spread to convince people who failed math, logic and reading comprehension in school
Nick,
Body styles? Really? Have you checked some of those “fat cats”lately?
@nick: The rich always have the body style that money and leisure affords them. That used to be fat instead of starving. Now it is healthier instead of less healthy.
All you tax the rich folks, I would ask if you would like to “eat the rich” also, since this does seem to be a feeding frenzy. However, in just the last 4-5 decades the body styles between rich and poor have flip flopped. The rich were always fat going back to the Roman Empire, and the poor, thin. Now, it’s just the opposite so you wouldn’t get much meat..it would be lean however. One can’t truly understand history w/o an appreciation of irony.
@bettykath: As a general rule, I ignore anybody complaining about “entitlements.”
For the vast majority of people receiving SS, Medicare or Medicaid, either that money would have to be provided by family or the recipients would go wanting and die. Neither alternative is worth talking about, really, at least in my mind, I am not capable of that level of cruelty over a relatively affordable amount of money.
My mother’s social security and Medicare lets her live independently, I (as the richest member of my family) would be paying her bills if those entitlements did not exist. She might be living with us in the guest bedroom (may fate forfend!). I do not begrudge my taxes to those programs, even though I doubt they will ever pay back what I have put into them, I consider it an investment in human dignity and the prevention of despair and misery.
To be more analytical, the cost of SS, Medicare and Medicaid is about $14,200 per worker in the USA (there are 128M) and the average worker earns about $45,200. So this is 31% of our income. If it were privatized it would be run as a for-profit operation, and that would create more problems than it would solve; specifically the problems that led to the creation of these programs in the first place.
a) No matter how much you exhort people to save for their retirement, they WON’T DO IT unless they are rich. People are not made for long term plans, it is not in our psychology, our psychology did not evolve in conditions where we lived much past the age of 40.
b) Private companies go bankrupt, Insurance companies go bankrupt, banks fail, stocks fail, bonds go unpaid, retirement plan investors make stunningly bad investments or get conned, and retirement plans can go south with any of those, and there is nothing that can rationally be done once the money is gone. The market and private companies are fundamentally unreliable.
c) Privatization is incentivized by profits. When profits are at stake, the private insurance company has a fundamental conflict of interest: The more benefits it pays out, the less profit it makes. A governmental program does not have that problem, because it does not have the goal of earning a profit, its goal is to do as much good as possible within the budget it is given. Also, it can use law to prohibit (or minimize) free riders, and it can ensure there is no surreptitious profit-taking by exorbitant salaries, perks, or benefits.
It is my firm belief that there are some jobs that have to be done that the vast majority of us do not WANT done for a profit incentive, because a profit incentive creates a fundamental conflict of interest. I do not want an army with a profit incentive, or police force, or firefighters, or insurance companies, or even health care.
I have no problem with those functions being staffed in a way that lets the market determine the wages of workers, but I do not want the organizations themselves driven by the bottom line. For example, I believe cops should be hired, and the wages should be set so we get all the qualified professionals we need. But what the cops DO, who they ticket and arrest and the laws they enforce, should not be driven by how much money they can make doing it.
” it was going up like gang-busters right before investors lost it all.”
But the money didn’t vanish. All investors did not lose. It fell b/c some sold his. Those in the know made lots of money – all the money that “vanished” from the high to where it was immediately after.