We have discussed the plan of the new French government to impose a 75% tax on the top earners in the country, a move that in my view is better politics than economics. Now there is an alleged tort to go with the politics (Thank God). France’s richest man, Bernard Arnault, announced that he was seeking Belgian nationality. The response from the leftist Liberation newspaper was a giant headline superimposed over Arnault’s face reading “Get lost, rich jerk”. Now Arnault is suing for for “public insult” – over the offending headline’s “vulgarity and brutality.”
Arnault is the head of the luxury conglomerate LVMH and denies that he is seeking Belgian citizenship to avoid the new tax by France’s Socialist government. The headline is a take off from a line by by ex-president Nicolas Sarkozy, who told a man who refused to shake his hand “Casse-toi, pov’ con” (“Get lost, you poor idiot”).
Notably, while the earlier blog;drew comparisons between the tax and the French Revolution, the newspaper drew the same analogy in its response to Arnault — saying he is like the “nobles and opulent bourgeois” who resisted and fled the 1789 French Revolution. It is a curious analogy given the disastrous orgy of blood following the Revolution.
Despite the unfortunate analogy and my general agreement that the 75% tax is unwise, I fail to see how this is actionable. In the United States, a “public insult” is protected speech and courts limit tort liability so not to allow civil lawsuits to “chill” free speech. In addition to this, Arnault is a public figure in the midst of a public controversy. This strikes me as something that should be protected as opinion.
To the extent that the newspaper states as fact that he is fleeing taxes (something he denies), there may be factual challenges. However, this also may be covered by opinion as to his motivations. Even other super wealthy French citizens and conservative leaders have denounced the move by Arnault.
While his spokesman have cited the “extreme vulgarity and the violence of the headline,” it seems pretty mild and non-violent on this side of the pond. Of course, the French laws are different on defamation and the United States tends to protect free speech to a greater degree than even its closest allies.
What do you think?
Source: France 24
Top corporate tax rates__1950s
I’ll let you do you your won research. Enjoy.
TonyC.,
Sounds good. But seems to function less than well. Is somebody not doing their job? Is the Fed taking out a hidden tax on us all (OT)? Are unions necessary? Why? Are they killing industry and public effieciency? Are businesses buying laws and influencing agencies whose job is to pursue the public interest according to their charter and the laws. Are the goals of industry essentially by nature (as practiced in America) opposed to doing a square deal with employees. Does Walmart ever give the least thought to the idea of enhancing the work situation of their employess? Etc Etc Etc.
Easy to ask questions.
I previously enjoyed your arguments on regulation of organizations which were essentially monopolies, and could actually be replaced in the form of a government servide, ie what are called utilities.
It is in many ways bad here, vv utilities. They are
inefficient. 5,000 employees to run a nuclear plant is not reasonable. And their record in keeping them on line is worst in Norden. They are participating in a cartel. They sell cheap power but charge the same prices as that of those produced at higher costs on the Continent. They are regulated, but raise their prices as though they were not. Sociallism is not effective in cases like this. Public resistance is weak. Power hungry industries get a better price, of course, as all big consumers do.
Thanks for the ideas anyway.
@Bron: If an office is manned “just to have a presence” then firing the person manning it means accepting a lack of presence; i.e. the owner is giving up something he thought was valuable, and more valuable than the money it was costing him.
Ergo, that “presence” was a necessity. If income taxes are 30%, and it costs $X to keep the presence, then the owner has made the judgment that $0.70X is worth giving up for that presence. (That is the amount he could get by taking the $X as income). Now if taxes go up to 75%, all the owner can gain in income by closing the outlet is $0.25X.
It makes no sense, if the presence was worth $0.70X before, to give it up for $0.25X now. All of that in the owner’s judgment. On the other hand, if taxes went DOWN to 10%, then the owner is comparing $0.70X to $0.90X for closing it, and that little extra might tip the scales toward firing the person manning the location and taking the profit instead.
Raising income taxes on businesses increases employment; lowering income taxes on businesses decreases employment.
“Business reinvested their earnings instead of hoarding because of the tax system.”
taxes were extremely low in the mid to late 1800’s and John D, The Commodore, Andy C. and other industrialists built huge empires and they were not worried about saving money on taxes. And they certainly didnt hoard money as evidenced by their lavish homes and lifestyles. Quite a few individuals were employed to build those houses and they were true craftsmen.
So much for the current state of freshman economics.
@Bron: In most businesses the owners are absent and not running the business, so management is allowed to be lazy. You were talking about active, greedy, wealthy owners, that have the power to fire people. If they are active and greedy, why are they running a charity by letting people goof off? They won’t, if they could fire people to double their profits, why wait for taxes to go up? Why not do it immediately? Are they profit-driven or NOT?
Your argument is incoherent.
@Idealist: Have you ever worked in a sweat shop?
I worked my way through my last 2 1/2 years of high school, actually, as a dishwasher, janitor cleaning toilets, carpet truck unloader, landscaping grunt, illegal barback (I was underage), even a temporary farmhand for three weeks during harvest season. Not exactly a sweat shop, in addition to school I only worked 30-35 hours a week, but I think the spirit is the same.
The reason you see all the things you mention is because management is minimizing labor costs, which they should do whether times are hard or good, that is THEIR job, maximizing productivity per dollar.
That is why they are moving jobs overseas, because they can, and it is cheaper. The south fought the civil war over slavery for one main reason, because slavery is extremely profitable. This is why I believe in protectionism and the restriction of foreign trade, because that is what businesses are doing now, going to places where they have zero responsibility for workers health or well being or retirement, and can engage in outright slavery or something close to it.
My social philosophy is all one piece with this: Businesses SHOULD be engaged in cost cutting and profit seeking and competition. Competition means businesses should be allowed to fail, and have to dismiss their workers and claim bankruptcy, and that should not devastate their employees. Which means government should provide the safety net for workers, unemployment pay, health care, retirement funding, and provide public transportation, schooling, and reasonable interest loans.
My social philosophy would let business be business, let it be temporary, risk-taking, profit driven and failure prone. Still regulated to protect others, but I do not mind if people become billionaires, as long as they do it without exploiting people. Charge both business and people what it takes to insure nobody ends up destitute as a result of business failure.
The mistake we have made is pretending businesses are permanent; and then propping them up when they falter. All good things can come to an end; economies grow and contract, nothing grows forever, even business geniuses grow old and infirm and die. The most stable thing we have is government, and that is where we should be putting our chips for the things we want to last for lifetimes.
tONY C:
Business only hires as many as they need? What a joke. I could go into most any business in America and trim something to increase profits. Or figure out what equipment is unnecessary.
There is a good deal of waste and inefficiency in large operations and duplication of efforts. There are also offices that are manned just to have a presence in a particular location even though they arent profitable.
TonyC,
Have you ever worked in a sweat shop? Ever been pressed to take care of more and more patients in a hospital? Ever been forced to have more and more students to teach? Ever had your sales goal raised time after time? Ever have to spend more time putting a prescription in a new data system (10 minutes) than in examining the patient (one minute)?***
Ever had to spend most of your time getting the latest re-organization to work well?
And it seems to me we see the shifting of manufacturing seek lower labor prices, than the
slackenig of demand as the reason for closing “factories”. Textiles went to the low labor southern states. Then it moved to S. Korea, investing in new and much more versatile weaving machines. Actually it was the S. Koreans who opened up, so southern state factories closed because their prices were not competitive and the materials produced did not attract designers.
***Lyme disease target pattern on skin.
Blind Faithiness,
Awesome … post
Oops. …staggeringly (fill in the blank with synonym for awesome/amazing)
What Tony says is absolutely true. Its basic macroeconomics. Freshman year business/economics class. This isn’t theoretical either. The US increased employment and production when taxes were at their highest on the wealthiest in the last century because of the exact reasons Tony mentions.
Business reinvested their earnings instead of hoarding because of the tax system. The top .1% may not have gained wealth quite as fast(they still made plenty of wealth) but the nation became the envy of the world.
Now, greed and power has won out over nation and people. (Not that I see the 20th century as a utopian dream, but the economic growth was staggeringly )
If you’re an American, job or no job, go hug your grandparents and actually learn what a strong, vibrant, nation-based economy once looked like.
@Bron: Do you think if the rich guy wants to put $1,000,000 in his pocket he isnt going to make his business more profitable, i.e. cut back on expenses which means getting rid of some overhead, i.e. people.
I have run a division of a public company, I have run two private businesses (and invested in several others).
Any businessman that can get rid of people without impacting his business and profits is an incompetent idiot. You do not run a business with “extra” people hanging around doing nothing, if you do, you are already wasting money that could be going to the bottom line (profit after all expenses).
It is a myth. A well run business has exactly the number of people it needs to provide the service and build and sell the products that it makes. No more. There is no excess, if there is, it is the manager’s job to figure out how to get rid of it, whether times are good or bad.
Well run businesses do not make decisions to lay people in order to make more profit, they lay people off because demand for their product has slipped and they do not have work for those people.
Bron you clearly do not know a damn thing about real business. Why in the world would a businessman employ a hundred people if he can get the job done with 80 people? That would just be silly, and fiscally irresponsible to the owners, partners, or investors. There are no “extra” employees that can be fired to increase profits, and if there are, there are some managers that should be fired for running a charity instead of a business.
is this free speech too?
http://www.huffingtonpost.com/2012/05/31/jay-townsend-nan-hayworth-acid-war-on-women_n_1560693.html?utm_hp_ref=fb&src=sp&comm_ref=false
I wonder what the guy hopes to gain by suing. It would seem to me that if seeing that headline hurt him, he’d be rubbing salt in his own wound by the lawsuit. But there may be reasons; there usually are.
One knows where one sits it’s stools.
Dung Ho
Aptly named
Anonymously Yours 1, September 12, 2012 at 10:11 am
When the 99% can avoid taxes to the same extent that the 1% do, then we’ll have equality……
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Good point.
you live in a dream world about investment in people and reinvesting the profits. If the boss needs $1,000,000, he is going to get it.
Maybe you would do that but not everyone is you.
Tony C:
Do you think if the rich guy wants to put $1,000,000 in his pocket he isnt going to make his business more profitable, i.e. cut back on expenses which means getting rid of some overhead, i.e. people.
So instead of paying himself 1,300,000 he pays himself $4,000,000.00, he doesnt care where the money comes from. Get rid of the corporate jet and pilot, chauffeur and Rolls, shut down the money losing operations in a couple of locations and the people they employ, eliminate the corporate dining room and the chef and other workers who are employed, get rid of the employee health club and those employees. Pretty soon he has his $4,000,000 covered and a bunch of people just lost their jobs and are now on unemployment or welfare.
Porcelain suits you better, better crown.