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
@Bron: What types of things?
What I am talking about, specifically, is functions that we want, that need to be reliiable for (what is today) a 50 or 60 year career that can be followed by a 20 or 30 year retirement, and will not let people in the last half of that career or their old, weak, and infirm retirement, be blind-sided by an institutional failure.
I do not see how ANY private organization or insurance can promise that at no time in the next 90 years will they make a fatal mistake and go bankrupt. A government CAN do that. Even if they make a big mistake, they really can just print money to cover their debts. That should be a last resort, but if it is the difference between the elderly living and dying, print the money.
The government is the only entity that can truly operate at zero profit, that can never be bankrupted, that can manage any financial crisis no matter how steep, and for the U.S., that can borrow money at the lowest rates in the world, or print it if nobody will lend it.
The government is theoretically unbeatable at business. That is why the only “businesses” they should be in are the “businesses” we, as a society (which to me means by a super-majority vote) do not WANT to be run at a profit, because a profit would create a conflict of interest in justice or morality. We do not want the police or courts or army to have an eye on how much money they can make; or our food, restaurant, or building inspectors, or our aircraft or drug inspectors, or many other things.
The whole point of competition is to produce the better product and service, and drive competitors out of business. One of my businesses drove 12 competitors to close shop or give up trying to make a product that competed with ours. Competition means companies go under, and if you have been relying on a company to care for you at the end of your life, them going under screws you with zero recourse; you cannot rework the last 40 years and choose differently.
The government is truly the only entity you can even theoretically trust to still be there. Relying on companies to be permanent is foolish.
http://www.thefreemanonline.org/features/friendly-societies-voluntary-social-security-and-more/
“In the United States, the government was less worried about the friendlies. The first major legislation, in 1893, was promoted by the friendlies themselves. They lobbied in Washington through the National Fraternal Congress. This organization represented 100 friendly societies with 6 million members and $7 billion in insurance funds. It pressed for passage of the “Uniform Bill,” forcing all new friendlies to adopt the same mortality rates. This would put them at a competitive disadvantage to the established societies. However, instead of driving off the upstarts, this legislation blurred the distinction between friendlies and commercial life insurance companies. Legally they were grouped together. As a result, the commercial insurance companies gradually absorbed the friendlies, leaving consumers with fewer choices.”
well that sums it up nicely on a number of different levels. Who would have guessed, well I know at least one woman. ROFLMAO
tony c:
in the 19th century people joined mutual aid societies to cover those types of things.
@Bron: If people are capable of work, I think they should work, even if it is busy work. As far as I am concerned, welfare is there to level the playing field; if somebody is disabled and cannot work more than a few hours a day, welfare should make up the difference. If they are truly incapable of any kind of work (i.e. mentally disabled, unconscious, etc) it should support them completely.
Of course I do not classify as “welfare” unemployment insurance. Like all insurance, many people pay so that a few unfortunate people collect, and more than they ever paid in. Insurance is not a savings account, it is an ongoing bet that you will be unfortunate.
I also do not classify as welfare Social Security, which I see as another form of insurance (and not a savings account).
@Bron: Under $20K would be about 20% of all household incomes, certainly a start.
If I were king of a State, I would also eliminate sales taxes on all groceries, prescription and OTC drugs, all clothing, and all used items of any kind, if they have been owned by the seller for more than a year and are selling for less than the price paid by the seller (e.g. is not a collectible or work of art).
If that caused a shortfall, then I would raise the rate on what was left to make it up.
justagurl:
Wal Mart has very cheap meds, they have over 100 they sell for around 10 bucks.
By the way 2-3 alieve is some damn fine pain relief and it lasts for 12 hours. Just have to be careful about possible bleeding.
tONY C:
people making less than or equal to $20k should pay no taxes at all, I could be ok with that. In fact it sounds pretty good to me.
Good idea. That would help the poor a great deal and might even make it possible for them to get a leg up.
If welfare is all or nothing, change that as well so that people can work and welfare is just a supplement to push you slightly above the poverty line.
for ONE…..
The “French Tycoon” is NOT leaving France….
he has stated that he is going to remain a TAXABLE citizen of France… he is ONLY getting a second citizenship….
secondly….
The TAX is not 75%…. it is 75% on anything over a MILLION Euros…
it is a PROGRESSIVE tax….
and lastly….
Reading Tony C.’s comments here, are POETRY….
This may be one of the few subjects I can totally agree with Tony on…
But, BOY….. reading what he writes here…. is just… WOW!!!!
and what is says is 100% CORRECT….
I long for the days that Corporations grew slowly… they made their money the hard way…. LONGEVITY…..
When I lived in Seattle… I was NOT insured…. I had to see a pain specialist in Oregon….
anyway… my medications were INSANE expensive…. to the tune of $600 to $800 a month….. I called EVERY pharmacy in the greater Seattle area….. and still my medicines were going to KILL me financially…..
Then one day, I heard an ad on the radio…
They said their prices were at least HALF that the leading pharmacy charged….
I called this pharmacy the very next day, to see if this was true…
SURE ENOUGH….. the prices on ALL of my prescriptions were at least HALF, what I was paying at WALMART…..
I asked to speak with the manager/ owner…. I could not just trust the word of the worker, It sounded TOO GOOD to be true…..
So, I asked this man, “Why are you able to charge HALF of what larger chains charge for the same prescriptions????? ”
His answer knock me OUT…
He said… “Because I don’t have to make my millions OVERNIGHT… people need these medicines, and charging more, is just taking advantage of the situation… ”
It used to be that a modest increase every year of steady growth was good enough….. NOW …. everybody wants to make their millions overnight…..
no more planing for the future of doing well… NOPE… it is get it quick… and step on anybody to make your millions….. and cheat the country that gave you the opportunity…..
@Bron: $100K is $32K more than the average household, literally.
As B.F. says, the guy DOES have skin in the game, he is living in poverty, and his life is far more difficult than average. He has suffered enough.
As a basic principle I believe in equally sharing the hardship of supporting the government. Not the percentage of pay, not the fixed dollar amount, the hardship, meaning the difficulty in life that supporting a government causes.
For a person that is earning $10,000 a year, taking $100 (1%) causes FAR more hardship than taking 1% of a physician’s income of $250,000 a year.
In fact it is nearly impossible to create the same level of deprivation in the physician’s life, as the loss of $100 in the poor man’s life, without basically resorting to Communism (which I do not believe in, I think it will always lead to corruption and revolution, peaceful or violent).
The inability to address that disparity of effects with arithmetic has a very simple fix: Do not try to address it. Set a threshold beneath which the poor pay ZERO taxes; thus have zero hardship as a result of supporting government. To paraphrase a recent song, they have 99 hardships but supporting the government ain’t one.
My preference, to be fair, is to make that threshold a deductible, to create a smooth function for take-home pay. I don’t want somebody earning $1 over the threshold to have less take home pay than somebody earning $1 under the threshold.
One reason I think this is fair, and the average is a good deductible, is that the society or country is obviously not working as well for these people as it is for others. We could use the median ($50K), but I think the average reflects the situation better.
As for kids, property, etc: I am not wild about including that stuff in the formula. I do not think it is the government’s place to financially reward or punish child bearing or home buying, over being childless or renting.
If you want to own a house, step up and pay for it; taxes are just part of the bill. I own a house, but I do not think renters should be required to subsidize that choice of mine. Especially if they are renting because they cannot afford a house! That seems a little perverse to me.
Bron
The guy making 10k a year is paying taxes. A much higher percentage of his/her pay is going to sales tax than someone making 100k because all of that 10k person’s money is going to just keeping them alive(ie taxes on essential goods). They may be paying property and some form of personal payroll tax as well.
So, if you buy anything you are almost certainly “pay[ing] something toward taxes” and proportionally the poor pay more of their earnings as taxes.
And as I’m sure Tony can explain again that the person/family making 100k will only pay tax on the 32k above the 68k marginal limit that he outlined in his plan.
Tony C:
I would be on board for no income tax for people making less than $68,000 per year. That would help a lot of families. Although if you make $100,000 per year and have a couple of kids, a couple of cars and a house, it really isnt that much money.
I guess really, everyone ought to pay something toward taxes, even the guy making $10,000 per year. Even if it is only a couple of hundred dollars or even $100.00. Just something so he has skin in the game.
Here’s an .org who watchs gov secrecy for those interested in that.
http://www.openthegovernment.org/node/3578
I wonder if truth is a defense to a libel action in that country. If so, the two words he found offensive may not be hard to prove. Rich? Show us your taxes. Jerk? Question of opinion not objective fact. Ask the jury after the trial is over if he is a jerk for giving up his citizenship.
@Bron: My tax policy would be to tax only the income in excess of the national average. The average household income is about $68K. So think of it as a $68K deductible. That would make about 63% of households income tax free. However, the field is so tilted now, that this deductible (which can be taken by the rich too) would amount to about 36% of all income. So, 64% of all personal income would still be taxed.
Since the Supreme Court says corporations are people, we will treat them like people: Same $68K deductible for them, then progressive taxation on any excess over that.
yes, competition is hard ass work. And it never ends. you are always one project away from oblivion.
Actually I did think you wanted to tax all income.
@Bron: Some large companies retain earnings, but most do not finance new ventures that way. They finance with debt (loans or bonds) or by selling stock.
As for not having any money in the bank: What is money for? Buying stuff. You can sell stuff when you need it, or trade it, or sell stock.
We are talking about marginal rates, I hope you understand, which would be a tax on income above a threshold. Like, $10M or something. So you still have plenty of money in the bank, and you can always SELL your stuff if you need more. Sell off a building, sell off some land.
Plus, I do not advocate a 100% marginal rate (although Eisenhower seriously proposed it), I think 60% or so would be enough, and even then only at the $10M profit level or so.
It isn’t Marxist at all, I do not WANT the companies to pay that, I want them to reinvest their money. I actually want them to have a higher net worth by creating greater value. But they don’t do that, because, contrary to your philosophy and in keeping with human psychology, competition is hard ass work and they don’t like doing it if they can take it easy instead. They need an incentive to engage, and a high tax would be it.
Tony C:
isnt savings “seed corn” for new ventures? If you just buy stuff and hire people and have no money in the bank how does that help you?
I dont disagree that there is something really wrong with our society when it comes to money making. When you have a CEO making millions per year plus millions in stock options and the secretary is barely keeping her family together making $12/hour. Personally, if I were the CEO, I could not live with myself. But the way to change it up is through a philosophical change through education of young executives. Not through this militant Marxist crap.
Capitalism produces wealth, we need to teach the secretary how to make more and the executive to be willing to pay more. I cant tell you how many times I have “borrowed” workers from other companies and the owner told me not to pay them more than they were making with him, he didnt want to put the idea into their head they might be able to make more. I totally disagree with that type of thinking. It is loser mentality.
@Bron: A 100% top marginal rate for corporations would maximize reinvestment, certainly. You could still own billions of dollars worth of STUFF, Bron, like land, buildings, factories, cars, planes, machines, intellectual property, etc. It would force mature companies into new areas and accelerate innovation, if they couldn’t do that, it would force them to buy back stock and increase the value of the remaining stock for shareholders, with a minor tax change we could let them act like LLCs and pass profits through to shareholders untaxed.
That is the point you are missing, apparently, is that a high marginal tax rate pushes a business to reinvest, and that means to buy or create stuff. That takes people, R&D, and the purchasing of products made by people. That is GOOD for the economy. The point is not for the government to confiscate money, the point is to make it more desirable for them to buy stuff with their profits and therefore stimulate the economy.
The lower the rate gets, the more the option of just adding profit to a portfolio or bank account gets, and those are mostly “sterile” investments, they do not stimulate the economy nearly as much as hiring people and buying products to make a new business or a bigger business.
“Raising income taxes on businesses increases employment; lowering income taxes on businesses decreases employment.”
then lets have a 100% business tax so we can have full employment.
people always point to the 1950’s, a blind pig could make money when all of the economies of the world were shot to hell from WWII and the US was the only player around.
The top income tax rate was 90% and the top corporate rate was around 47%.
Apparently things werent going so well because JFK reduced taxes and set off a little economic boom.