Bizarre, Politics, Society

Hollande Moves To Impose Another 75 Percent Tax For High Earners

220px-François_Hollande_(Journées_de_Nantes_2012)200px-Exécution_de_Marie_Antoinette_le_16_octobre_1793I have been a critic of the tax policies of French President Francois Hollande, including his disastrous 75% tax on the rich. The tax, as expected, has resulted in an exodus from the country of many top earners and a reluctance of others to move to France. However, with his poll numbers at a historic low, Hollande is continuing his “eat the rich” campaign. Last week, he announced a desire to impose a 75% tax on companies for salaries above 1 million euros. It is yet another blow to the French economy and will further deter new business for the struggling nation.

Hollande announced that when companies pay the large salaries to top executives “the company will have a contribution to pay that will reach 75%. During these difficult times, can’t those that are at the top make an effort for 2 years? The company will thus become responsible”.

I know how unpopular such salaries are, particularly at a time of economic hardship. However, the salaries are part of a global market for top executives. Imposing such a tax once again makes France a hostile environmental for such businesses, which are badly needed to boost a failing economy. This is imposed on top of other deterrents to new business such as mandatory labor rules making it difficult to fire French workers, guaranteed long vacations, and an array of other taxes. Investors have complained that they do not want to take over failing French businesses due to this environment, including the recent flap over comments by an American businessman.

I happen to think corporate salaries are too high, but I do not believe that government should regulate this part of the market. Moreover, the tax has no connection to social costs or public benefits. It is merely a punitive measure targeting the wealthy.

Politicians always garner support for socking it to the rich through taxes. However, it is an extremely shortsighted strategy. In the U.S., we have seen clear moves out of high tax areas like New York and California. The result is a reduction in tax bases. The fact is that tope earners pay the vast majority of taxes so the loss of such earners has a significant impact on tax revenue. These jurisdictions make themselves economic islands of high tax zones as more and more business is pulled into areas with average or lower tax rates. France is the most extreme example. The earlier 75 percent tax rate is viewed widely as a colossal failure for precisely the reasons raised earlier. Yet, Hollande is still offering up the rich as a popular target even though such taxes will generate little significant revenue. What it will do, however, is magnify the image of France as entirely hostile to high earners and new businesses.

Source: Guardian

82 thoughts on “Hollande Moves To Impose Another 75 Percent Tax For High Earners”

  1. RWL 1, April 1, 2013 at 5:30 pm

    To the Elites:

    How are you able to sleep, knowing that there more than 500k homeless children on the streets in America? How do you sleep knowing that there are homeless, jobless, and low-income veterans in America? The same veterans who helped protect and allowed you to make your millions or billions. A revolution is coming. I hope you are prepared.

    =====

    RWL,

    Given my vantage point, the elites are well prepared. And they sleep just fine, sadly.

  2. SWM, So do I. Hill is a real actor.

    AP, Thanks, I’ll listen to the interview. I listen to npr in my car but I spend little time driving when I’m in San Diego. I’ve only filled my car up once since getting here in January.

  6. To the Elites:

    How are you able to sleep, knowing that there more than 500k homeless children on the streets in America? How do you sleep knowing that there are homeless, jobless, and low-income veterans in America? The same veterans who helped protect and allowed you to make your millions or billions. A revolution is coming. I hope you are prepared.

  7. Aaron Sorkin writes Newsroom and penned the alleged “most honest 3 minutes.” He ranks third in my list of dialogue writers just behind the Cohen Bros., and Tarantino. Sorkin wrote Moneyball. One of the best scenes in that flick is when Billy Beane[Brad Pitt] is trying to instruct his assistant[Jonah Hill] how to tell a player he’s been traded. Pitt first merely says to be direct and blunt. Hill is incredulous. Pitt then asks Hill “Would you rather be shot in the head once or 5 times in the chest and bleed to death?” Communism is shooting the wealthy in the head, socialism is shooting them 5 times in the chest. But, as anyone w/ any common sense knows, “Eventually, you run out of other people’s money.”

  8. Everyone should read Swarthmore mom last 2 links, especially the last one: troubles the soul trying to comprehend and believe our government’s economic/financial decision-making.

  10. The most honest three minutes in television history. BTW, he has his ranking facts correct. He gave some rankings that might vary a bit from year to year, but not enough to be significant.

  11. Bron,
    I agree completely we can cut spending. However, we have the military-industrial complex President Eisenhower warned about. War is profitable. When the Congress insists on giving the Pentagon more money than they need or even ask for, something is wrong. The F-35 program is one of the most useless, and most expensive, programs I ever heard of. You could not pay me enough money to get me to fly that POS. We have more warships than we need and they keep ordering more. I would have much less problem if it went for infrastructure and helping poor kids with college loans and grants.

    So, short answer is that we cannot afford both guns and butter. If they would stop spending so much on preparing for a world war that will never come, and fighting regional wars that never should have been fought in the first place, then we might be able to keep bridges from falling into the Mississippi river.

    Here is a chart depicting the proposed Federal budget for discretionary spending for last year. I went back several years to see if this is typical, and it is.

    http://2.bp.blogspot.com/-ASc26lT_Ckw/TwyxNsURJ8I/AAAAAAAACWI/bgf8mxSU7OA/s1600/proposed_fy2012_discretionary_spending.png

  13. I forgot to add: the Wall Street Journal reported that most of Fortune 500 companies are holding their overseas profits in overseas accounts so that they won’t have to pay the U.S. taxes on them. The combine amounts, from these companies, is more than $1.3 trillion, according to the Wall Street Journal.

  15. Can anyone tell me what is considered middle class? What is the income and number of persons in a household in order to determine if your middle class or members of the elite? John McCain put the number at $1 million? Obama put the number at $250k? These income figures include 4 persons per household. What is the cutoff between middle-upper class and the rich?

    CNBC reported that the CEO of Facebook paid $1 billion in taxes after his company went public via the stock market; After finding out that he owed so much in taxes, Mr. Facebook only smiled and remark: ‘I expected this, but it was only a small matter. Nothing to worry about.’

  16. Otteray Scribe:

    he has convinced a group of people he is worth that much and without his services they will make much less money.

    I am sure he can afford to pay more but if he can then we all can. We just had a tax increase on the middle class in the form of payroll tax. When does it end?

    Why cant we cut spending?

    Back before Clinton capped executive salaries they werent making that much. It isnt salary but stock options.

    here is a breakdown of Duke’s 2011 compensation package from yahoo:

    “Duke, 62, who has been Wal-Mart’s CEO since February 2009, received a base salary of $1.3 million, up almost 3 percent, and stock awards worth $13.1 million, up 3 percent from fiscal 2010. But Duke’s cash-based performance bonus fell 25 percent to $2.88 million in the fiscal year ended Jan. 31 because the company’s operating income fell short of goals established in the compensation plan, according to documents filed Monday with the Securities and Exchange Commission. Wal-Mart’s operating income growth has been hurt because the company’s aggressive moves to cut prices to better compete with rivals have hurt gross profit margins.”

    Stock is where he is making his money and you can thank Clinton for that.

  19. Mike Duke, the CEO of Walmart, makes over 1,034 times the pay of the median employee at the company. Not the lowest paid, but the average worker. What does he do in his office to justify making between eleven and twelve thousand dollars an hour? And don’t tell me it takes that much reimbursement to find someone competent. As I have pointed out before, the Chairman of the Joint Chiefs of Staff at the Department of Defense gets paid about the same as the average physician. That is a job far bigger than running a chain of department stores, no matter how big the company.

    I challenge anyone to tell me why he cannot afford to pay a little more in taxes. As it is, his tax rate is lower than his secretary. His employees who make a thousand times less than he does cannot manipulate their funds, deferments and investments like he does in order to reduce his tax bill.

  20. Bron, A senior executive that is making in excess of 50 million while paying his middle class employees 50 thousand a year is taking money from the available salary pool. Why he can’t he make 3 million and spread the wealth. Their services certainly are not worth that much more.

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