France slaps 7 billion euros in taxes on rich, big firms

[Bad_Daddy 2,209]

http://news.yahoo.com/french-budget-adds-7-billion-euros-taxes-rich-100603279--business.html

By Daniel Flynn | Reuters – 2 hrs 14 mins ago

PARIS (Reuters) - France's new Socialist government announced tax rises worth 7.2 billions euros on Wednesday, including heavy one-off levies on wealthy households and big corporations, to plug a revenue shortfall this year caused by feeble economic growth.

In its first major raft of economic measures since Francois Hollande was elected president in May promising to avoid the painful austerity seen elsewhere in Europe, the government targeted companies and the rich with tax hikes.

An extraordinary levy of 2.3 billion euros ($2.90 billion) on wealthy households and 1.1 billion euros in one-off taxes on large banks and energy firms were central parts of an amended 2012 budget presented to parliament.

The law, which also includes increases in taxes on stock options and dividends and the scrapping of tax exemptions on overtime, should easily win parliamentary approval before a July 31 deadline, given the Socialists' comfortable majority.

Hollande says the rich must pay their share as France battles to cut its public deficit from 5.2 percent of GDP last year to an EU limit of 3 percent in 2013 despite a stagnant economy and rising debt.

"We are in an extremely difficult economic and financial situation," Finance Minister Pierre Moscovici told a news conference. "In 2012 and 2013, the effort will be particularly large. The wealthiest households and big companies will have to contribute."

The budget followed a grim assessment of public finances on Monday by the state auditor, which warned that 6-10 billion euros of deficit cuts were needed in 2012 and a hefty 33 billion in 2013 for France to avoid a surge in public debt dragging it into the centre of the euro crisis.

One of the highest state spending levels in the world has raised France's debt by 800 billion euros in the last 10 years to 1.8 trillion - equivalent to roughly 90 percent of GDP, the level at which economists say it starts to harm economic growth.

Budget Minister Jerome Cahuzac said that, while the initial focus this year was on tax rises for the wealthy, the government would progressively rein in spending from 2013 onwards.

"Cutting spending is like slowing down a supertanker: it takes time," he told Reuters.

Having promised to freeze central government spending without cutting staffing levels, Hollande faces the difficult task of convincing France's powerful public sector unions to accept a cap on pay rises and promotions.

This is likely to figure on the agenda of a "social conference" next week with unions and employers.

"I think the unions accept this idea of rigor," Civil Service Minister Marylise Lebranchu told RTL radio, insisting that upcoming measures would not amount to draconian austerity.

"SARKOZY MORE BUSINESS FRIENDLY"

The Socialists accused the previous government of President Nicolas Sarkozy of deliberately overestimating economic growth and tax revenues by several billion euros ahead of presidential elections in April and May.

Prime Minister Jean-Marc Ayrault on Tuesday slashed this year's official GDP growth forecast to 0.3 percent from a previous estimate of 0.7 percent, and to 1.2 percent in 2013 from 1.75 percent previously.

The amended budget eliminated a number of measures taken by Sarkozy's government, such as a tax exemption on overtime for companies with more than 20 employees. Scrapping that measure should raise 980 million euros this year.

Repealing a law which shifted labor charges onto a rise in VAT sales tax will also have a net positive effect of 800 million euros, and a doubling of a tax on financial transactions to 0.2 percent will bring in 170 million euros.

"There's a sharp break, politically and to a lesser extent economically, with Mr Sarkozy's more business-friendly fiscal policies," said Nicholas Spiro of Spiro Sovereign Strategy.

"As long as there's no pressure on France's bond market, the government is unlikely to pursue the kind of product and labor market reforms which France requires."

France's 10 year bond yield was 2.5 percent on Wednesday, less than half the 6.4 percent yield on Spanish bonds.

The Medef employers union has already said that measures such as a new 3 percent tax to be paid by companies on dividends distributed to shareholders would strangle already weak profit margins. The Socialists say this levy is aimed at encouraging firms to use their cash flow for capital investment.

Some 300,000 people are likely to be affected by the one-off rise in wealth tax on households with net worth of more than 1.3 million euros, which rolls back a tax shield on the rich introduced by Sarkozy, officials said.

[Bad_Daddy 2,209]

http://www.ft.com/intl/cms/s/0/278412e6-9538-11e1-8faf-00144feab49a.html#axzz1zfw2vXVr

May 4, 2012 4:32 pm

Wealthy French eye move across the Channel

By James Pickford, London and South-East Correspondent

Wealthy French people are looking to London as a refuge from fresh taxes on high earners pledged by candidates in the country’s presidential elections.

The “soak the rich” rhetoric that has punctuated the presidential campaign has prompted a sharp rise in the numbers weighing a move across the Channel, according to London-based wealth managers, lawyers and property agents specialising in French clients.

François Hollande, the Socialist candidate who leads the presidential race after the first round of voting last week, wants to impose a tax rate of 75 per cent on income above €1m and at the launch of his bid in January said: “My true adversary in this battle has no name, no face, no party ... It is the world of finance.”

Inquiries from French clients had risen by roughly 40 per cent since the speech, says David Blanc, a partner at Vestra Wealth, a London-based wealth manager.

“I have definitely seen strong interest in what could be done to protect assets both for people resident in France but also for French nationals who are UK resident,” said Mr Blanc, a former UBS executive.

The prospect of a Gallic diaspora of high earners was backed up by Knight Frank, the property agent, which said numbers of French web users searching online for its prime London properties online in the past three months had risen 19 per cent compared with the same period last year. The equivalent figure for Europe as a whole fell 9 per cent.

“The election seems to have pushed a growing number of wealthy French to consider their options for where they are likely to base themselves in the future,” says Liam Bailey, head of research at Knight Frank.

London’s status as an international finance hub as well as its proximity to France make it a natural choice for French professionals rattled by the campaign’s hostile mood towards the wealthy. Enclaves of French expatriates are firmly established in areas such as Belgravia and South Kensington, close to the Lycée Français Charles de Gaulle, a popular secondary school.

The departure of France’s business people, entrepreneurs and the young for opportunities overseas is not a new phenomenon. When Nicolas Sarkozy visited London in 2007 he called for its French residents to return to a reformed France under his presidency. But the trend has been accelerated by the growing possibility of a Socialist victory in Sunday’s decisive second round of the presidential election.

Mr Blanc says some French clients were even contemplating acquiring British or other nationality in order to safeguard assets from fears that France could move to collect more tax from citizens overseas. “A lot of people are extremely worried,” he said.

Alexandre Terrasse, a partner in corporate and property law at Jeffrey Green Russell, says he had seen a 25 per cent rise in activity from French clients over the past six months, “The 75 per cent tax is clearly a sign that the politicians will hit the wealthy and they don’t want to have to deal with that.”

Bernard Grinspan, managing partner of the Paris office of Gibson Dunn, an international law firm, says: “Some of our clients are very seriously discussing relocation – not only to London but also Singapore and New York. There’s a lot of uncertainty.”

[X Factor 1,112]

Gotta find a way to pay for all those social programs; this is equivalent to cutting your nose to spoil your face.

[Darnell 8,479]

perhaps the new tax monies will be used to deport all of the muslim immigrants to Libya?

[^_^ 5,021]

perhaps the new tax monies will be used to deport all of the muslim immigrants to Libya?

Even the muslim immigrants who actually came from morocco and other muslim countries?

Why do you hate non-libyan muslims?

[Darnell 8,479]

you assume too much, Sir

[slim 1,533]

A nice Greek or Spanish vacation for all Frenchmen?

[Póg mo 1,749]

Good on France. The the past thirty years of mollycoddling the rich has been a failure by any measure. A small percentage of people have become immensely wealthy at the expense of the rest of society. Just look how messed up the United States is. The rich always bleat about how much of a percentage of total tax revenue they pay, but are completely silent on why this so. The fact is. The rich pay most of the tax, because they have most of the income. The American middle class has been in decline since Reagan came along with his trickle down economic ideology and shows no sign of recovering anytime soon.

[slim 1,533]

Somebody needs a math class. ^^^^^

[Póg mo 1,749]

Somebody needs a math class. ^^^^^

Well I do have a honors degree in physics, so no, I don't think that I do.

[Neonred 3,647]

Good on France. The the past thirty years of mollycoddling the rich has been a failure by any measure. A small percentage of people have become immensely wealthy at the expense of the rest of society. Just look how messed up the United States is. The rich always bleat about how much of a percentage of total tax revenue they pay, but are completely silent on why this so. The fact is. The rich pay most of the tax, because they have most of the income. The American middle class has been in decline since Reagan came along with his trickle down economic ideology and shows no sign of recovering anytime soon.

I call that BS. I remember the pre-Reagan years. Rampant inflation. I look at what the middle class has now, huge homes, huge flat screen TVs, cell phones, cable TV, broadband internet, multiple computers in the house, nice cars, and I compare that with what we had in the 70's and I think the middle class is doing pretty damn well. All this even during a bad down cycle in the economy.

[Dakine10 5,452]

I call that BS. I remember the pre-Reagan years. Rampant inflation. I look at what the middle class has now, huge homes, huge flat screen TVs, cell phones, cable TV, broadband internet, multiple computers in the house, nice cars, and I compare that with what we had in the 70's and I think the middle class is doing pretty damn well. All this even during a bad down cycle in the economy.

A couple of differences though, is that most of the middle class didn't buy everything on credit back then, and they weren't stretched to the limit trying to pay for it.

Many of today's "middle class" families are at the point where both parents work full time and all the money goes to bills with very little disposable income left. It may be nice to call people in that situation "middle class", but technically this has historically been described as "working class".

In other words, we shouldn't equate the expansion of the credit system with a rise in real wealth. You can see that's not the case if you look at real income. If you want to assess how much better or worse off a given group of people are, real income is a better indicator than flat screen TV's.

[Bad_Daddy 2,209]

http://www.aei-ideas.org/2012/05/swedens-amazing-supply-side-tax-cut-experiment/

James Pethokoukis | May 9, 2012, 2:59 pm

Sweden’s amazing supply-side, tax-cut experiment

When Europe’s finance ministers meet for a group photo, it’s easy to spot the rebel — Anders Borg has a ponytail and earring. What actually marks him out, though, is how he responded to the crash. While most countries in Europe borrowed massively, Borg did not. Since becoming Sweden’s finance minister, his mission has been to pare back government. His ‘stimulus’ was a permanent tax cut. To critics, this was fiscal lunacy — the so-called ‘punk tax cutting’ agenda. Borg, on the other hand, thought lunacy meant repeating the economics of the 1970s and expecting a different result.

Three years on, it’s pretty clear who was right. ‘Look at Spain, Portugal or the UK, whose governments were arguing for large temporary stimulus,’ he says. ‘Well, we can see that very little of the stimulus went to the economy. But they are stuck with the debt.’ Tax-cutting Sweden, by contrast, had the fastest growth in Europe last year, when it also celebrated the abolition of its deficit. The recovery started just in time for the 2010 Swedish election, in which the Conservatives were re-elected for the first time in history.

‘Everybody was told “stimulus, stimulus, stimulus”,’ he says — referring to the EU, IMF and the alphabet soup of agencies urging a global, debt-fuelled spending splurge. Borg, an economist, couldn’t work out how this would help. ‘It was surprising that Europe, given what we experienced in the 1970s and 80s with structural unemployment, believed that short-term Keynesianism could solve the problem.’ Non-economists, he says, ‘might have a tendency to fall for those kinds of messages’.

He continued to cut taxes and cut welfare-spending to pay for it; he even cut property taxes for the rich to lure entrepreneurs back to Sweden. The last bit was the most unpopular, but for Borg, economic recovery starts with entrepreneurs. If cutting taxes for the rich encouraged risk-taking, then it had to be done. ‘In most cases, the company would not have been created without the owner,’ he says. ‘There would be no Ikea without [ingvar] Kamprad. We would not have Tetra-Pak without [Ruben] Rausing. They are probably the foremost entrepreneurs we have had in the last few decades, and both moved out of Sweden.’

But they were not rich, I say, when they were starting out. ‘No, but they were becoming rich. If you have a high wealth tax and an inheritance tax, people emigrate because it becomes too costly to own a company. Ownership is a production factor. Entrepreneurs are a production factor. Yes, these people are rich and you can obviously argue that we want to encourage social cohesion. But it is also problematic if you drive out entrepreneurs from your country, because they are the source of job creation.’

What even Borg did not expect was that his tax cut for the low-paid would increase economic growth so much that it has almost entirely paid for itself. Borg had created something that Osborne’s critics say does not exist: a self-financing tax cut. ‘There was some criticism at the time that we were borrowing to finance tax cuts,’ he says. But Sweden could do it, because it was expecting to return to surplus soon; Britain has no such luxury, he says. His main advice to Osborne is: ‘Keep on dealing with the deficit, because deficits destroy everything else.’

http://www.bloomberg.com/news/2011-04-13/sweden-predicts-surplus-plans-tax-cuts-as-economy-beats-europe.html

Edited July 7, 2012 by Bad_Daddy

[Xanax 349]

Gotta find a way to pay for all those social programs; this is equivalent to cutting your nose to spoil your face.

I think it's to spite?

[Póg mo 1,749]

http://www.bloomberg.com/news/2011-04-13/sweden-predicts-surplus-plans-tax-cuts-as-economy-beats-europe.html

Is this the same Sweden where people pay the second highest rate of tax in the world? But wait. aren't taxes supposed to destroy a countries economy? Oh, I just don't understand your idealogical bent on cutting taxes no matter what. Perhaps Sweeden isn't in the same dire straits as the US, preciously because they pay enough taxes to cover their services without the need like the US to borrow money.