LAST TANGO IN PARIS
July 19, 2006
According to French government data, on average, at least one millionaire leaves France every day. It's not that they're finding other places more charming, it's that France punishes its wealthiest with burdensome tax rates that sometimes reach as high as 72 percent, says Investor's Business Daily (IBD).
Many of those leaving aren't just the nouveau riche. Even some old-line families who have guided French business and industry for decades are saying au revoir.
- In addition to high income, capital gains, inheritance and social security taxes, the wealthy French are hit with a "solidarity tax."
- Like the alternative minimum tax in the United State, the solidarity tax is meant to make sure the wealthy pay their fair share for France's out-of-control welfare state.
- In some cases that levy can actually exceed a person's income, making it one of the greatest incentive killers of all time.
This tendency to take from the rich and give to the poor, which is supposed to solve all the problems in France, is ruining the country, says Alain Marchand, a London-based consultant who helps relocate French business executives.
Eric Pinchet, who has written a French tax guide, reckons that revenues from the solidarity tax are roughly $2.6 billion a year. That's a trifling amount, especially considering that Pinchet believes the tax has cost France more than $125 billion in capital flight since 1998.
Indeed, both the rich and the not-so-rich who are young, skilled and ambitious are leaving for countries where labor markets are less regulated by the state and taxes aren't as burdensome. That exodus might help explain why real gross domestic product (GDP) in France has grown just 1.5 percent a year on average since 2000 -- lagging the rest of Europe.
Source: Editorial, "Last Tango In Paris," Investor's Business Daily, July 19, 2006.
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