The French Exodus

Even before François Hollande was elected President of France on Sunday, wealthy Frenchmen were looking to move to London to avoid threatened high wealth taxes put onto the rich.

What is happening in France now is a harbinger for what to expect in the United States because of Taxmageddon 2013.

President-elect Hollande wants a new wealth tax of 75% put on Frenchmen making more than a €1,000,000 euros a year.

Sound familiar? Think, “pay their fair share”.

The Chunnel Connection

Two days before the French elections, London’s Financial Times published this article on the wealthy fleeing France: “Wealthy French eye move across the Channel“- James Pickford, FT, 5/4/2012

London appeals to the French as a tax haven because it’s a world commerce center and because it’s close to home.

According to the FT, London-based wealth management firm, Vestra Wealth, has had a 40% increase in inquiries from French clients after Hollande said this in his January announcement that he was running for French president:

My true adversary in this battle has no name, no face, no party … It is the world of finance
– François Hollande, French presidential announcement, 1/26/2012

That sounds a lot like Occupy Wall Street protesters railing against the big banks and the “1%”.

Wealthy Frenchmen are worried about oppressive new taxes specifically aimed at them.

The election seems to have pushed a growing number of wealthy French to consider their options for where they are likely to base themselves in the future
-Liam Bailey, Knight Frank Researcher, 5/4/2012

Conclusions

Ain’t nobody gonna drum up sympathy for the ultra-rich, either in France or in the United States. They make enough as is. They can afford more taxes.

It’s certain, as a result of the election, that some wealthy Frenchmen will indeed start moving to London and other places.

Before crying “foul!” over Frenchmen moving to avoid paying high taxes, though, consider a low-finance American equivalent.

Average Americans living in Vancouver, Washington USA do not buy their cars or other big ticket items in Vancouver. No. Instead, they drive across the Columbia River to Portland, Oregon to make those purchases.

Why? Washington State has a sales tax, Oregon does not! Normal average everyday Washingtonians drive a couple miles to Oregon to avoid paying taxes. In fact, it’d be dumb not to.

The same is true for wealthy Frenchmen. They’d be dumb not to consider their options for avoiding what they consider to be oppressive new taxation.

Wealthy Americans, also, will consider moving out of the United States when, in their view, wealth taxes become oppressive. They’d be dumb not to.

The problem for the United States is that wealthy Americans living overseas to avoid taxes might discover that globalization has made conducting business there more profitable than here.

When that happens the wealthy will take their businesses and the jobs they create with them.

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About azleader

Learning to see life more clearly... one image at a time!

Posted on May 7, 2012, in 2012 Elections, culture, economics, eurozone, Life, news, Opinion, Politics, Taxes, Thoughts. Bookmark the permalink. 6 Comments.

  1. 75% of zero is still zero. I read somewhere today that in France, government spending is 60% of their GDP. If they could raise more money by raising taxes they would just spend more. This ought to be fun to watch.

  2. You are correct…
    According to the U.S. State Department, French government spending was 56.2% of GDP in 2010 and its estimated 2011 GDP is $2.77 trillion.

    French government GDP% is more than twice that of the U.S.

    So in France, the relative amount collected from an increase in taxes on the ultra-rich will be a lot less compared its existing tax burden since France taxes its citizens so much higher.

    The French middle class has got to be hit with HUGE taxes already.

    Taxing the ultra-wealthy more will have the predictable effect of further reducing demand and thus further slowing the French economy.

    Like all Keynesian thinkers, Hollande must believe that he can invest the increased tax revenues wisely enough to produce more demand than gets lost from taking it out of the economy in the first place.

    France’s economic growth depends on Hollande’s ability to do that.

    • Some countries have exit taxes if you give up citizenship. Does France? I do not believe the US does. I have seen an article where it says about 1000 a year give up US citizenship to live in lower tax country. To think your citizenship is for sale is a real head turner. Getting a headache right now thinking about that…..

      • I do not know… but it must be easy to come and go.

        In the FT they said that 5 years ago, when Sarkozy first became President, he went to London to lure tax escapees back with whatever policies he instituted.

        Regarding citizenship changes… put the blame where it belongs… on the tax system and not on the citizen. Heck, of the 1 thousand U.S. a year, 750 of them probably come from New York! lol!!!

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