Don’t look now, Californians, but your taxes are about to go way up — or else. Excerpt:
California’s projected budget deficit has ballooned to $16 billion, much larger than predicted just four months ago, Gov. Jerry Brown said Saturday as he warned of draconian cuts to schools and public safety if voters don’t approve his November tax-hike measure.
The governor said the shortfall grew from $9.2 billion in January in part because tax collections are sluggish and the economy hasn’t recovered as quickly as expected. The deficit also has soared because lawsuits and federal requirements have blocked billions of dollars in state cuts to social programs, Brown said.
“This means we will have to go much farther and make cuts far greater than I asked for at the beginning of the year,” Brown said in an online video.
Mr Hollande plans to implement a 75pc tax rate on earnings over €1m (£800,000), on top of a 45pc rate for people making €150,000 or more. He is also expected to raise “wealth taxes” on property assets and end his predecessor’s tax incentives to lure bankers back home.In addition, France’s high earners feel increasingly unwelcome in a country now led by a man who has admitted: “I don’t like the rich.” So where are they looking? London.
This is not just about rich people being selfish. Consider the labor costs of doing business in France:
But not all the concern is about a punishing tax regime, according to those French already here in London. Stéphane Rambosson, managing partner at consultants Veni Partners, argues Hollande’s arrival bodes ill for business.
“You have to have a very specific reason to have a business in France instead of the UK, for example access to skilled workers or the need to be very close to clients,” he said. “Sarkozy had implemented reduction in social changes to increase competitiveness in France. Such changes will disappear and labour costs, which are huge, are likely to rise.
“If you pay an employee say £100,000 in London the equivalent in France is already over £170,000, simply due to costs. Administration and the regulatory framework is also very complicated.”
(Funny that wealthy French are considering making themselves tax exiles to the UK. I bet Keith Richards and Mick Jagger are getting a kick out of that.)
So, again, a philosophical question: at what point do you decide that personal financial considerations overcome your sense of loyalty to your home country? When does your government tax you out of patriotism? Is it ever morally right to renounce one’s country because of a tax burden one considers confiscatory? I can see it, if one concludes that the government is taking so much of your income that it imperils the financial security of your family. And I can see it on basic principles of fairness. If my government were taking three out of every four dollars I earned, I would find that hard to take for long. Our situation in the US is nothing like what they’re facing in France, but I still winced the other day when I told my wife I had just signed on for a small, sideline writing gig. She said, “Well, I hope you’re doing it for love, because I’m pretty sure every penny of that is going to taxes.”
This France situation sticks in my craw because as a general matter, I dislike and distrust that Davos-class of international elites who feel no loyalty to any country, only their financial interests. That said, if I were a rich man in Paris, and was facing that kind of tax bill, I have to admit that I would seriously think about becoming a tax exile. Not saying I would do it — I would have to think through the moral and philosophical considerations — but I would at least consider it.
So, my question to the room: At what point is making oneself a tax exile morally acceptable?