Will France Opt for Bernie Sanders-Style Taxation?

uly 21, 2024 by Dan Mitchell @ International Liberty

Some folks on the left have a deep-seated resentment of successful investors, entrepreneurs, business owners, and other high-income people.

 

They want to hit them with confiscatory tax rates, even if the tax is so punitive that the government doesn’t wind up with more revenue.

Heck, some of them are so consumed by hate and envy that they’re willing to hurt lower-income people so long as higher-income households are hurt even more.

Let’s call this Bernienomics since the self-avowed socialist senator from Vermont is an avid proponent of this type of class warfare.

This spiteful mindset is not limited to the United States. The U.K.-based Times has an article from David Chazen about how some French politicians are pushing horrible tax policy.

French high earners are exploring ways to move their money out of the country over fears that a new left-wing government could impose a 90 per cent tax rate and confiscate any inheritances worth more than €12 million. …many well-off French people are alarmed enough to be talking to tax lawyers about taking their money abroad… Similar policies by previous left-wing governments led to tax exoduses, most recently in 2012 when François ­Hollande became president… The political crisis could trigger a brain drain…those considering leaving also include middle and senior managers of technology and finance companies.

That’s the bad news.

The good news is that divisions in France’s parliament may prevent any policy changes.

…investors…now see the political gridlock as the least-worst outcome.

And the Telegraph, also from the U.K., has an article on the same topic by Charlotte Gifford.

It describes how France has a sad history of bad tax policy. Here are some excerpts.

France’s wealth tax was first introduced in 1982 by Francois Mitterrand, the then-president. …Between 2000 and the year it was abolished, the wealth tax led to the outflow of 60,000 millionaires, according to research group New World Wealth. …But the wealth tax…was not the only one introduced in France in recent years. Francois Hollande’s controversial “supertax” was first unveiled in 2012. It imposed a 75pc rate on earnings above €1m…The levy immediately caused outrage…the supertax was shot down in December 2012 by the country’s highest court… In its place came a 75pc levy on businesses employing people who earned more than €1m a year. …the policy made France a less attractive place to become a top executive. …between 2013 and 2014, the tax raised a meagre €400m, which led to it being dropped after just two years.

It’s hardly a surprise to learn that class-warfare taxation did not raise much revenue.

Successful people have considerable ability to alter the timing, level, and composition of their income.

Or they can simply move to places with better tax policy (especially since French exit taxes are not overly onerous).

P.S. Monaco has much better tax policy, but that’s the one place in Europe where France has the ability to impose extraterritorial taxation. So successful French people can opt instead for Switzerland (or, if they simply want to escape capital gains tax, they can choose Belgium).