Friday, 28 September 2012

The French twist on fairness

Can tax rates at 75% work?

They have been announced after being long trailed as France tries to get it budget deficit in order. Interesting that France is of course running a deficit only half of the UK's; however, starting with a high debt level means that in many ways our positions are fairly similar at a macro level.

75% tax on earnings over a million euro's is not going to lose you many votes, I guess that is the calculation. As in the UK, if it was applied to salaries of over £750,000 then hardly anyone would be hit. Very few work for PAYE wages at this level - oddly, mainly professionals I would imagine like top doctors and lawyers. Most owners at this level would pay themselves dividends in any event in the UK and so avoid that tax in any event. Private Equity earners and Hedge Funds who mind have all legged it to Switzerland already.

Which leads me to wondering why 75%, its such an arbitrary number, why not 100%? If you are going to go down a socialist road like this the 100% income tax level makes a lot more sense, especially at the incredible sum of 1 million euro's a year income and above. Certainly key socialist goals such as levelling societal incomes would be greatly enhanced if you enforced a single, 100% tax on all income over such a level. After all, 75% leaves you with not much anyway given there are sundry taxes to pay as well as this. 100% would be in many ways fairer to society.

And if you were really a serious socialist, you would also impose 100% death duties on all but the family home. That way you could ensure that there was no inter-generational advantages generated, people would spend all their money and so boost the current economy. This would boost fairness measurebaly in society.

Mr Milliband has said how much he admires Francois Hollande - I hope to see some of these ideas in his conference speech.


Demetrius said...

According to my private bank sources nearly all the rich French are long gone from paying much in the of taxes at home. Basically this is a stunt. Doesn't Hollande have a place in Monaco?

CityUnslicker said...

Yes, I agree a stunt really - but a silly one I feel.

Electro-Kevin said...

Phew ! Thank God you don't seem to be a fan of The Apprentice.

Otherwise you'd be suggesting a tax of 110% and even I know that would be unsustainable.

andrew said...

it depends on where he is trying to get to
- if it is to signal to all voters that `we really are in it together` even though the tax wont actually make much difference ( iirc being told that the cost of collecting the 50% rate in the uk was not far off what it brought in ), fine.
- a different view is that he knows that it wont make a difference and when it doesnt, will be able to point to all the rich people paying themselves out of interest income,dividends and disposals that reduce the effective rate to x%
and that is beelions and will eliminate the defecit at a stroke.

Budgie said...

Behind every disaster there is a politician. The British (owned) car industry disappeared because it was used as the economic regulator of its day. Not Unions, not management, but politicians.

Similarly the current economic malaise, in the UK, the USA and the eurozone, is not a property bubble, not indebtedness itself, not bankers (or even banksters), not even productivity; these are all crises but they are symptoms, not causes.

In the eurozone the general view is that the euro is fine, it's just the bankers, or debt, or les anglo-saxons. So Hollande with his tax-itus is trying to cure the symptoms not the disease.

Blue Eyes said...

The UK Greens want a "maximum wage" and so they would like your policy. Even the Greens admit that such a policy would discourage enterprise so they would make an exception to the 100% tax rate for company profits and dividends...

dearieme said...

"... impose 100% death duties on all but the family home. ... people would spend all their money and so boost the current economy": people would spend all their money on more expensive houses - would that really boost the economy?