An article published on August 7th in the New York Times says that rich French citizens are scrambling to leave France following the election of Socialist Party President François Hollande. Hollande campaigned on a promise to raise the tax rates of citizens earning more than 1,000,000 euro to 75%, which obviously has “les Riches” in a petit panic. Even American actor Will Smith (appearing on a French television show) expressed shock and alarm upon discovering that the proposed tax rate is “soixante-quinze”— after saying moments before that he would support higher taxes in the United States.
France elected its first Socialist president since Mitterand this past spring, and his disdain for the wealthy is certainly head-scratching. He has openly said that he does not like the rich, which is, frankly, bizarre. Many notable French residents, including actors and models, having taken notice of this anti-wealth rhetoric, and have already fled the country in fear of the incredibly high tax bill they’d be facing. Others are likely to follow if the tax rate actually goes into effect.
France has incurred their massive debt problem via an extremely generous social welfare program and an unwillingness to embrace any sort of austerity measures. It’s great to take care of citizens via healthcare and other benefits, but if a country cannot produce the money to actually pay for programs like this, problems will manifest themselves. France is spending itself into oblivion and instead of cutting spending, they are taxing those who actually contribute to society and to the economy.
If tous “les Riches” leave France, France will definitely be in a bit of a pickle. Their current top tax rate is 41%, which is high, even for European standards. The proposed 75% rate would be the new highest tax bracket in all of Europe. Only an estimated 7,000 to 30,000 people in France even earn enough money to place them into the 75% bracket— a number that’s certain to dwindle.
The rich did not get rich by being stupid. They’ll figure out a way to avoid paying the tax, or they’ll leave the country. No French citizen making 800,000 euro is going to actually want to make any more money than that. Why would they? They would be punished harshly for their new earnings. Also, what business is going to want to move into an area that treats those who make money so poorly? According to the New York Times, several firms have already backed out of moving into France. This is costing jobs for citizens of France.
The French cannot continue like this much longer. Instead of taxing the wealthy at extreme rates, perhaps the French should start giving birth to additional tax-payers. France hasn’t had fertility rates at above-replacement levels since 1974, and has experienced a birth rate as low as 1.75 births per woman in 1994. Although France’s fertility rate has rebounded to a respectable 2.01 births per woman in recent years, that’s still below replacement level. If nobody’s actually alive to pay taxes, the state cannot collect any money from them, and will continue to tax the rich harsher and harsher. If the economy is bad, it’s a lot less likely that people will have children. This is a vicious cycle and must be stopped.