Those words were uttered as a warning to François Hollande as high-earning soccer players threatened to go on strike, and the richest man in France, Bernard Arnault, threatened to follow actor Gérard Depardieu, along with 200,000 other French, to southern Belgium. All because of the supertax imposed on high-income earners.
The hallmark of Mr. Hollande’s enactment of the supertax has been 0.3% economic growth, 10+% unemployment, and an embarrassingly low level of foreign direct investment. The French can now breathe a sigh of relief though, as they bid adieu to France’s supertax fiasco. Read more here from the WSJ about the lessons learned and, as the French Economic Minister frequently urges, “the need to turn away from old-school socialism in favor of stimulating entrepreneurship.”
French investors will breathe a sigh of relief this month, as the country’s supertax on high incomes quietly expires. The supermistake won’t be missed.
François Hollande promoted the 75% tax rate on earnings over €1 million ($1.2 million) to fire up his Socialist base during his 2012 presidential run. Once enacted, it proved an immediate fiasco. High-earning soccer players threatened to go on strike over the rate.LVMH boss Bernard Arnault , the richest man in France, threatened to obtain Belgian citizenship as the tax went into effect, though he ultimately withdrew his application.
Around 200,000 French live in Francophone southern Belgium, according to an estimate by the French magazine Le Figaro, of whom an estimated 5,000 are tax exiles. Switzerland is home to another 2,000 French tax exiles. London and New York are also preferred destinations.
It wasn’t as if nobody in the government saw this coming. Emmanuel Macron, then an adviser to Mr. Hollande and now the Economy Minister, warned the supertax would turn France into “Cuba without sunshine.” Economic growth has hovered around 0.3% for much of Mr. Hollande’s time in office, unemployment remains above 10% and the country attracts an embarrassingly low level of foreign direct investment. FDI dropped to less than $5 billion in 2013, from an annual average of $84 billion in 2005-07.