Wealthy French say au revoir to taxes

[David S]

http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20060720/NATION/607200351&SearchID=73251271132691

Wealthy French say au revoir to taxes
Fed up with a country renowned as the most burdensome for taxation, the rich flee to neighbors.
Molly Moore / Washington Post
PARIS -- Denis Payre, a self-described French jet-setter, built a successful high-tech company from scratch, then opted to quit at age 34 to spend more time in France with his wife and children.
Instead, Payre said, he was pushed into exile by the French government, which sent him a tax bill of nearly $2.5 million on paper assets he couldn't cash in.
"They were asking me to pay taxes on money I didn't have," Payre said. "I had no choice but to leave the country."
Payre, who moved his family to neighboring Belgium eight years ago, is part of a sizable community of rich expatriate French driven out by the world's highest tax bills on wealthy citizens. On average, at least one millionaire leaves France every day for more wealth-friendly nations, according to a government study.
At a time when France is struggling to stay competitive, business leaders say the country can't afford to make refugees of some of its most-established business families. They include members of the Taittinger Champagne empire, the Peugeot auto magnates and leading shareholders of dominant retailers Carrefour and Darty. Also going are members of a generation of high-tech entrepreneurs.
Socialist leaders and some government officials say the rich are shirking their social responsibilities by fleeing with their millions.
Payre said that when he decided to leave his high-tech company, Business Objects, in 1997, he owned shares worth $110 million -- on paper. French tax authorities required Payre to pay a wealth tax of 2.2 percent on the shares, based on what the shares would have been worth had he sold them at the market's highest point.
But Payre said he didn't have access to them because of stock market regulations that limited his ability to sell and that, in any case, a market dip had devalued the shares.
The wealth tax -- officially called the solidarity tax -- is collected on top of income, capital gains, inheritance and social security taxes. It's part of the reason France consistently ranks at the top of Forbes magazine's annual Tax Misery Index.
Wealthy citizens' tax bills can be higher than their incomes, according to tax analysts. President Jacques Chirac's government made changes last year intended to guarantee that no one would pay more than 60 percent of income in taxes, but many businesspeople say actual rates still hover around 72 percent.
France's tax structure is more than a means of supporting the nation's expensive cradle-to-grave social services. It is deeply rooted in the nation's history and psyche, dating from the French Revolution of 1789, when peasants overthrew an obscenely rich aristocracy and sent many to the guillotine.
In a recent debate, France's opposition Socialist Party leader Francois Hollande said his party's -- and his country's -- opposition to proposals to lower high-income taxes has nothing to do with disdain for the wealthy. "I don't have anything against rich people, as such," he said. "They have the right to be rich. But I can't accept that the richest can have their taxes lowered."
Eric Pinchet, author of a French tax guide, estimates the wealth tax earns the government about $2.6 billion a year but has cost the country more than $125 billion in capital flight since 1998.
The flight has been aided by business-friendly rules of the 25-nation European Union that protect cross-border commerce.

[Jens]

Amazing that a person who has be able to earn a lot of money cannot afford to hire some people that can help him with the tax rules in the country he lives in. With that much money he should easily be able to earn more that 2,2 % pro anno even with a very conservative investment strategy

A credit to the Detroit News journalist manage to claim that the current Gaullist system has anything to do with the revolution in 1789, where it by the way was the citizens and particually le peuble of the cities that rebelled against the incompetence of the king's government; not the peasants who rebelled against the new regime on numous ocations during the following years.
I hate when journalists ramble about history based on something they saw on Discovery Channel!

[MODU]

Well, that's one way to lower the income disparity in the country.

[David S]

Well, that's one way to lower the income disparity in the country.

LOL yes universal poverty! Come to think of it thats more or less the way the communist countries attained income equality; by making everyone poor.

[dazzleman]

Well, that's one way to lower the income disparity in the country.

LOL yes universal poverty! Come to think of it thats more or less the way the communist countries attained income equality; by making everyone poor.

That's the only way to attain economic equality.  And even then, those who favored the political system got more.  So income was allocated not, theoretically, on contribution to the economy, but on how good your support was for the communist party hacks in power.  That's why they became so poor.

Taxing the rich to death sounds so good if you have no money.  It seems France has succumbed to this.  The danger for governments like this is that with a more unified Europe, it's more like the US in that it's easier to pick up and go to another country that has more favorable tax rules.