France drop it's 75 % "super tax" on high income

[Adar]

I cannot say that I am surprised by this at all.

First of all the income tax is hard to manage as if you set the bar too high no one will pay the tax and if you set it too low you will run specialists out of the country.

Secondly it is extremely hard to manage as the financial incentives to bypass it are just too high.

In the end the net income of this tax is €420M over two years which can be compared to the budget deficit of €84.7bn

Source
With the party leftwingers having marched out of government in the days and months following the appointment of the openly pro-business Manuel Valls as prime minister last March, it was only a matter of time before the tax was dropped. The prime minister confirmed it would not be renewed in 2015 during a visit to London in October, where he addressed business leaders.“The reform clearly damaged France’s reputation and competitiveness,” said Jorg Stegemann, the head of the executive search firm Kennedy Executive. “It clearly has become harder to attract international senior managers to come to France than it was.”Tax lawyer Jean-Philippe Delsol, author on a book on tax exiles called Why I Am Going To Leave France, said last month many high earners had agreed with their companies that salaries would be limited during the two years the tax rate applied, and they would “come to an arrangement afterwards”.Finance ministry studies showed that despite all the publicity, the sums obtained from the supertax were meagre, standing at €260m in 2013 and €160m in 2014, and affecting 1,000 staff in 470 companies. Over the same period, the budget deficit soared to €84.7bn.The decision to drop the tax is a personal blow for Hollande and only one of a number of government U-turns since he was elected, fuelling criticism that he is indecisive and lacking presidential authority.

[Dante Von Hespburg]

To be honest, about damn time here. Such a rate was as you pointed out rather economically suicidal and difficult to in reality keep and have any semblance of long term economic stability and indeed incentive for high earners (And usually the key players in a states economy) to actually stick around. I think the paltry €420M over two years compared with that growing deficit does speak for itself here.

[justicar5]

To be honest, about damn time here. Such a rate was as you pointed out rather economically suicidal and difficult to in reality keep and have any semblance of long term economic stability and indeed incentive for high earners (And usually the key players in a states economy) to actually stick around. I think the paltry €420M over two years compared with that growing deficit does speak for itself here.

Yup, the Conservatives set up to many holes for corps to steal money from, start the treason trials, and send in an etradition request for Jeff Bezos et al. on fraud and grand larceny charges.

[Thorn777]

To be honest, about damn time here. Such a rate was as you pointed out rather economically suicidal and difficult to in reality keep and have any semblance of long term economic stability and indeed incentive for high earners (And usually the key players in a states economy) to actually stick around. I think the paltry €420M over two years compared with that growing deficit does speak for itself here.

High earners dont need any more encentives. High earners already trick around to unlimited degrees. The problem is again freedom of capital movements. France must have known this - that this tax would not work in this way. This rather reeks of populism of the kind meant to please the radical French voter while at the same time showing them that their sentiment is counter-productive. Now they can go full fledged neo-liberal...because people dont get things like what Im saying.

And surely those 430M may sound like peanuts, but in the same times freedom of capital movements was lifted and took effect, also various different forms of untaxable and under-taxed forms of income increased. The realy wealthy are hardly even effected by income-taxes these days. After reviewing the facts: income tax is a redundant taxation method, at least in the shape it acts today as a mayor source of revenue with increasingly limited returns for those actually paying income-taxes.

If a country could actually pin down its surplus capital and actually tax it to its true extend, then it would be solving most our problems today. To point at taxing the most oppulent sources of capital as idiotic because it would just leave the country, should rather ask themselves why it can do that, why it could not in the past, and why its oh so important in this age where wealth is increasingly concentrated.

If all your answers lie in appeasing big money(like UK does as a business model) and putting the burden of taxation on the broad mass simply because they cant blackmail the govt into buying their groceries and paying their rent abroad, then that might make you one of the fastest rats in this rat-race, but its still a rat-race held on a sinking ship.

[alhoon]

Along with the source I read elsewhere too that the tax brought in like 470M from 420 people and caused 80B Euro of revenue flight, reducing the French GDP by that.

Dropping the tax was the right thing to do. I don't think it makes Hollande seem "unpresidential" and indecisive. It was a DISASTROUS law in effect and repealing it was the "presidential" thing to do.

[paleologos]

...if you set it too low you will run specialists out of the country...

I don't understand what you mean by that.

Also, Adar, what's to top tier income tax rate in Sweden?

On my part, I agree that tax laws for the top earners become disproportionately difficult to enforce as the incentives to legitimately avoid paying that tax become greater, for the simple reason that top earners have a far greater array of resourses at their disposal to effect such an avoidance.

Still, I cannot help remarking that no man can produce with his skill, time and effort enough output to trully earn the kind of money top tier managers are payed.
They don't really get payed for their work, but for the negotiating power they wield, for knowing how the "game" is played at the top "league" and the opportunity to learn just that is not given equally to all.
It seems to me that this is the price we are paying as societies for allowing mercenary entities to grow to such sizes.

[IZob]

First of all the income tax is hard to manage as if you set the bar too high no one will pay the tax

Does France have a corruption issue?

and if you set it too low you will run specialists out of the country.

Ok firstly, specialists are drawn to an area for a number of reasons: Skills, resources, location, market... tax is only one part of it.
Secondly, specialists do not make up 100% of high income earners and specialists can be in any income bracket.
Thirdly, what kind of specialists are you referring to? Keep in mind this is Europe and France is surrounded by many high tech industries in nations that have similar debt problems.
Lastly - Some high income earners are not specialists; in a way that they provide special goods. They could be just Monopolists.

On my part, I agree that tax laws for the top earners become disproportionately difficult to enforce as the incentives to legitimately avoid paying that tax become greater, for the simple reason that top earners have a far greater array of resourses at their disposal to effect such an avoidance.

Still, I cannot help remarking that no man can produce with his skill, time and effort enough output to trully earn the kind of money top tier managers are payed.
They don't really get payed for their work, but for the negotiating power they wield, for knowing how the "game" is played at the top "league" and the opportunity to learn just that is not given equally to all.
It seems to me that this is the price we are paying as societies for allowing mercenary entities to grow to such sizes.

Well said.

[Adar]

Does France have a corruption issue?

Ok firstly, specialists are drawn to an area for a number of reasons: Skills, resources, location, market... tax is only one part of it.
Secondly, specialists do not make up 100% of high income earners and specialists can be in any income bracket.
Thirdly, what kind of specialists are you referring to? Keep in mind this is Europe and France is surrounded by many high tech industries in nations that have similar debt problems.
Lastly - Some high income earners are not specialists; in a way that they provide special goods. They could be just Monopolists.


Well said.

First of all legal measures to reduce taxes are not corruption.

Second of all, specialists mean everyone with specific skills (implicitly such skills that are of value to the country). With a high threshold most specialists will be unaffected by a "super tax" and with a lower threshold an increasing amount of specialists will be affected.

[justicar5]

First of all legal measures to reduce taxes are not corruption.

Second of all, specialists mean everyone with specific skills (implicitly such skills that are of value to the country). With a high threshold most specialists will be unaffected by a "super tax" and with a lower threshold an increasing amount of specialists will be affected.

They are if the bribes..sorry campaign donations, (I really can't tell the difference between those brown envelopes full of 100s) are given to get the law passed. Seriously politicians should have the logos of their corporate sponsors tattooed somewhere prominent (the forehead for instance) is it is easy to see who they actually represent, but it sure as hell isn't the people who vote for them.

[Adar]

They are if the bribes..sorry campaign donations, (I really can't tell the difference between those brown envelopes full of 100s) are given to get the law passed. Seriously politicians should have the logos of their corporate sponsors tattooed somewhere prominent (the forehead for instance) is it is easy to see who they actually represent, but it sure as hell isn't the people who vote for them.

That is completely different from taking measures such as starting a one man consultancy firm instead of being an employee.

[Aanker]

Took them long enough.

I remember this was discussed intensely on the boards a year or so back and for all the magical wand waving that appeared to constitute the arguments for this abhorrent tax, the opponents were right: it was a practically unfeasible solution and the moral argument was weak as well.

[Napoleonic Bonapartism]

And at around the same time Thomas Piketty rejects the Legion D'Honneur... coincidence... I think probably.
Still it's a little ironic, though this is different to Piketty's proposed Wealth Tax, it's in the same kind of vein.