[Closed] France abandons 75% tax rate

This should show people how counterproductive such measures are.

Or it showed that it doesnt work for this particular implementation, rate and country.

yeah but didnt depardeu clear off to russia as a result? cant be all bad

[img] [/img]

Tax cuts for French millionaires! Socialists eh 🙄 8)

Quite a few people here regard large amounts of personal wealth as a product of society and therefore reason a large portion of that wealth belongs to society.

It's an idea I find flawed but it's pointless arguing as those who believe it just can't see any flaws.

@whatnobeer - fair point on this specific measure but we in the UK have more high earners than in France so the risks are greater here of such a measure backfiring.

@jools yes agreed they do, that was one reason I wanted to highlight such a left leaning country as France has abandoned it's plans. As I have posted before people I know in the French racehorse industry have suffered badly as owners have moved abroad, its the trainers, stable workers, physios etc who lose out

Sounds more like an argument for taxing the international movement of capital rather than not having higher rates of taxation for the wealthy.

Also, for 2015 French Budget the EU may well rule it 'illegal' as they are not meeting their obligations on debt v income from the Euro treaty so this change may not be set in stone anyway.

@wwaswas - well you couldn't have such a tax in the EU, it goes against fundamental EU principals. Also having such transfer taxes (or exchange controls) has been shown to be very damaging to economies and trade.

As for the budget, yes you are right the French let's just keep spending model is broken and likely to be declared in breach of EU rules, so illegal. The fact is this tax proposal has been counterproductive, the government have decided it hasn't worked it's actually made things worse (ie less revenue not more)

meanwhile one of europes more right leaning governments actually sees the value in education

http://www.independent.co.uk/student/last-german-state-abolishes-university-fees-9774555.html

Marginal rates are often very high here too, for example; as a contractor if you pay yourself using a combination of salary and dividend you can go from 0% to 65.8% when you 'breach' £32k.

Income tax - 40%
Employee NI - 12%
Employer NI - 13.8%

Aren't we meant to eat the rich, not tax them? Maybe we should try that now then? Toryburger anyone? They're a bit sour tasting, to be honest. Quite bitter.

[img] [/img]

If its any consolation to the French, I agreed with their approach to Royalty

[i]Also having such transfer taxes (or exchange controls) has been shown to be very damaging to economies and trade.[/i]

Whereas the way that large corporations currently manage their tax affairs has been agreed by all to be the best of all possible worlds as far as providing income to governments in the countries where revenue is actually earned?

@kimbers, I am all for free University places, if we can afford it. I would give free/subsidies places based upon means testing but only where we can afford it.

If its any consolation to the French, I agreed with their approach to Royalty

I have no doubt that the proposals will have caused a fall in tax revenues,

That's called faith based economics. Find something you agree with and you have no doubt that is true. No different to the Tories and "Austerity is the only way".

It would be nice to see some actual stats, although given the tax was introduced in the middle of a recession I doubt you could could ever work out what affect it had on its own.....

I would give free/subsidies places based upon means testing but only where we can afford it.

Surrey?

[i]free/subsidies places based upon means testing but only where we can afford it.[/i]

it's this 'affordable' thing isn;t it.

Governments *always* find money for things they want to and declare anything else 'unaffordable'.

Happy to keep giving huge amounts of money to wealthy pensioners because we can 'afford' it but not invest in the education of those expected to earn the money to pay the taxes to fund it because that's 'unaffordable'.

@footflaps - can you not join the dots here? The proposal (very popular with those voting for Hollande) is being abandoned by a left leaning government, it wouldn't do that if it was working would they ? Yes it involves some guess work / anecdotal evidence but it's clear to me it's not working. The French wealth tax has really hit farmers hard, some in areas like Ile de Re which have become popular tourist/second home areas have been hit by huge bills they have no income to pay as their land has been valued on the basis of the inflated second home land values.

Affordable? Fear not! Its all ok. Gideon found a few tens of billions down the back of the sofa, but he decided that schools and hospitals are rubbish, and what we really need is another great big fireworks display near Fallujah

@binners ha ha, I meant only when the country can afford it

@wwaswas, the government is giving money to wealthy pensioners its reversing ridiculous tax anomalies (55% rate paid on pension plans) and it is not giving them money it is not taking it where to do so is frankly unjust. It was taking tax at a higher rate (55%) from a pension pot than if the individual had paid tax (40%) on it in the first place.

The proposal (very popular with those voting for Hollande) is being abandoned by a left leaning government, it wouldn't do that if it was working would they ?

Politics is never that simple!

If you mean that governments only enact policies that are proven to work then I suggest you look at the UK sex education policy or prison policy or drugs policy. In all cases, rhetoric / religious belief trumps evidence / stats / effectiveness.....

What exactly is a wealthy pensioner?

[i]Or it showed that it doesnt work for this particular implementation, rate and country. [/i]

That was predictable.

[i]kimbers - Member
yeah but didnt depardeu clear off to russia as a result? cant be all bad.[/i]

He looks as if he's eaten Russia.
😯

[i]joolsburger - Member
Quite a few people here regard large amounts of personal wealth as a product of society and therefore reason a large portion of that wealth belongs to society.[/i]

That'll be the have nots then.

[i]It's an idea I find flawed but it's pointless arguing as those who believe it just can't see any flaws. [/i]

Very well put.

Edit:
[i]binners - Member
Quite bitter.[/i]
Oh, definitely.

[i] the government is giving money to wealthy pensioners[/i]

That's what I said.

And we always pay tax on income that's previously been taxed don't we? That's what VAT on consumer goods is all about or property taxes?

Most people's pension pots were invested in with money that was offset against their taxable income at the point it was invested so it's not been taxed ever at 40%?

What exactly is a wealthy pensioner?

[i]"The Institute for Fiscal Studies has found that pensioner households now have bigger incomes than those of working age."[/i]

[url= http://www.rightannuity.co.uk/pensioner-incomes-now-higher-than-working-households ]http://www.rightannuity.co.uk/pensioner-incomes-now-higher-than-working-households[/url]

and none of the main parties will deal with it because old people vote and young people don't.

Full article;

[i]IFS data shows that pensioners have a bigger income than working families.

The Institute for Fiscal Studies has found that pensioner households now have bigger incomes than those of working age.

The gap between young and old when it comes to income is becoming ever wider, as the report details that a quarter of young adults haven’t yet got onto the housing ladder and still live with their parents.

The IFS report found that pensioner households had a 5% higher income than working households, whereas people aged between 22 and 30 have seen their incomes shrink by 13% since the start of the financial crisis.

Unsurprisingly given the increase in house prices along with the lack of wage rises over the past few years, the number of under-30s owning their own homes has fallen sharply over the decades, with 45% of young people owing their own home in the 1960s to just 13% in 2012-2013. The IFS report notes that renting for young people will become the norm and many of them will never be able to get on the housing ladder in their lifetimes.

A spokesperson for the IFS said that there has been a large shift in direction when it comes to the incomes of the young and old, which has been accelerated by the recession. Even though younger people had gained through lower interest rates and lowered rent prices, they had been badly hit by unemployment and lower wages.

Pensioners have gained overall since before the recession. In 1992 they had an income that was 20% less than working households and was an average of £256 a week.

Fast forward 12 years and they now enjoy a higher income and the average income for pensioner households is now £388 a week.

The report also noted that there wasn’t a north-south divide with falls in income for working households, although the level of losses differed greatly between different areas ranging from 8% drop in Northern Ireland to a 2% fall in the East Midlands.[/i]

What exactly is a wealthy pensioner?

Plenty of CEOs on 6 figure annual pensions, index linked, all paid for by the share holders....

What exactly is a wealthy pensioner?

One who doesn't smell of wee?

"The Institute for Fiscal Studies has found that pensioner households now have bigger incomes than those of working age."

http://www.rightannuity.co.uk/pensioner-incomes-now-higher-than-working-households

and none of the main parties will deal with it because old people vote and young people don't.

Yep I read that and whilst the older generation vote and decide who gets in power, they're going to get off lightly. You'll struggle to find someone younger than 50 at a Tory Party Conference....

@wwaswas - not sure if you are responding to me but the government was reversing a policy that saw pensions taxed at 55% when the likely original rate would have been 40%. You said huge amounts but the cost of reversing this tax measure was £150m, in government budget terms it is not that large a figure.

seems like "high earners" do not really care much for their country of residence..
maybe its the greed that is the problem.

You'll struggle to find someone younger than 50 at a Tory Party Conference....

You have to be careful with statistics, the IFS showed the average family had a household income around £65k whilst at the same time a lot of current pensions have the benefit of final salary schemes which today just don't work numbers wise so have been phased out.

This just comes back to the numbers, a 75% tax rates sounds great doesn't it, but the left leaning French has found out it actually doesn't work, numbers wise.

[i]maybe its the greed that is the problem.

[/i]

Please continue.

2.8% of benefit spending is on unemployment.

42% on pensions, a large proportion of which is not means tested.

In which area are people demonised for claiming when they don't 'need to' or have income from other sources?

I'm happy for pensioners to receive money from the state but I think the time when it's just handed over as a reward for reaching a certain age should be over - it should all be means tested like other social benefits.

[img] [/img]

Young Conservatives are pretty well representative.

Of what? 😯

[img] [/img]

An extremely shallow gene pool by the looks of things. And the fact that even the Tories themselves mean 'anyone under 50' when they say 'young' 😆

There is a French company in the studio/office complex where I sometimes work, they relocated to london from Paris as it was easier to do business and far less red tape as well as the tax issue, there must be 6-8 people working there who are obviously happy swapping one vibrant city for another, be interesting to see if they bother to move back next year or stay.
Most of their sales are Internet or to boutiques (they sell lingerie and tastefully packaged and designed playthings to discerning clients)

2.8% of benefit spending is on unemployment.

42% on pensions, a large proportion of which is not means tested.

@MrSmith BINGO ! Exactly. When I was in Paris last year many people asked me how they could move to the UK for work. I know the John Lewis guy was joking but he spoke the truth.

There is nothing inherently unworkable about high tax rates. The problem is with wide disparities of tax rate, where people can easily move to take advantage of them.

I often advise people on moving to avoid capital gains tax bills when they are selling very valuable assets. Easily the best places to go are Albania and Montenegro. Almost no-one takes that advice. They prefer to pay 28% than go to Albania.

If France and Belgium have radically different tax rates, people are just going to move to Belgium, as it's next door, or to London, as it's just as good. The failure of the French rate hike simply demonstrates that it is currently too far out of step with the rates in comparable countries to avoid producing a loss of the tax base.

[i]This is actually why many state sector businesses have been privatised[/i]

you think?

Not for ideological reasons or to ensure profits for those that finance political parties or provide jobs for politicians once they decide to finish their parliamentary careers?

I thought when RM was privatised the pension liability was deliberatly left with the state to make it more attractive to the 'long term investors' who all sold their stick within hours of the market for them starting?

[i]I'm happy for pensioners to receive money from the state but I think the time when it's just handed over as a reward for reaching a certain age should be over - it should all be means tested like other social benefits.[/i]

Problem is, the people I've spoken with, mistakenly think that their pension is / will be, the result of the Gov taking all the tax they've paid, ever. Saved / invested that money, during their career, which is then paid back to them in retirement.
Which as we know, isn't the case. So before you test, to see who actually [i]needs[/i] a state pension, in retirement. It might help to educate the population on this matter.

I agree Solo - it's the same problem the Police have - there is no 'pot' it's all paid out of current income and once the number of people claiming exceeds the amount being chipped in by those paying it becomes a problem.

And another thing...

Newspapers go on about 'benefit scroungers' spending their lives on the dole and how 'something should be done'

Once these people hit 65 and get the State Pension suddenly they're the salt of the earth and deserve every penny they get - you never hear a squeak from a tabloid paper about them.

you never hear a squeak from a tabloid paper about them

Because old people don't just vote, they buy the paper as well.

It's an idea I find flawed but it's pointless arguing as those who believe it just can't see any flaws.

On the contrary, I can see plenty of flaws in ideas like these. Problem is I can also see flaws in the alternatives. It's best to strike a balance, of course, but the difference between tories and me is where we put that balance. Do you favour maximum reward for playing the game well, or do you prioritise helping those in need?

I wouldn't have said 75% on earnings over €1m was a good idea, though.

@footflaps come on, that's clearly not true. William Hague spoke at 17 years old. the Young Conservatives are pretty well represented

Well at least this time you're using facts, even if they're more than 25 years out of date! (He's 53 now)

Since then membership of all parties has been ageing and shrinking dramatically! The CP won't actually release current figures (rumoured to be less than 100,000 now, down from more than 3 million in the 50s).

[b]jambalaya[/b]
what these stats really tell you is the very large cost of state sector final salary pensions. This is actually why many state sector businesses have been privatised, its to get rid of the pension liability. Means testing the state pension wouldn't actually change those stats very much and would be political suicide for any party that tried to implement it including the Labour party.

Actually I'm fairly sure that is just the state pension (£113.10 per week for everyone over 65) of which there are roughly 11 million people. This doesn't include the additional cost of public sector employment related pensions. I do agree means testing would be crazy though as (i) people accepted paying NI on the expectation of their pension when they reached that age (ii) it would be a disincentive for people of working age to address their own pension if doing so reduced state pension.

Tough one this. we need more tax [i]income[/i], rather than specifically higher tax [i]rates[/i], so avoidance etc needs to be looked at.

I can see how - if I earned enough for it to be a problem! - I could live with paying 40% of my earnings above £x a year toward the wider public good, and I would be comfortable doing so.

I can also see that if someone then said they were going to take 50% off me, I might feel aggrieved enough to loo at how I could wriggle out of it, hence a reduction in the tax I ultimately paid

Tough one this. we need more tax income, rather than specifically higher tax rates, so avoidance etc needs to be looked at.

Which is why this anaemic austerity led recovery is so bad, most of the new jobs still quality for tax credits and don't generate any tax revenue at all. Hence we have employment up but tax receipts unchanged.

Good job that ironically under a Tory government austerity has largely been a myth in the UK? One reason why the economy has grown relatively strongly. The other irony is the fact that socialist governments have run tighter fiscal policies.

Funny topsy-turvy, old world.

No surprise that Fr is abandoning a tax policy that flies in the face of plenty of research on where the optimal rate of tax is to generate the most income. Sure as hell is not 75%!

No surprise that Fr is abandoning a tax policy.....

It was only ever introduced as a two year emergency tax, why are you pretending that they are "abandoning" it ?

[i]That, we now know, will take the form of a two-year emergency tax of 75% on individuals earning more than €1.1m (£900,000) a year as part of his government's efforts to fill a €30bn hole in the public finances.[/i]

From an article dated Sept 2012 :

http://www.theguardian.com/world/2012/sep/15/paris-dispatch-tax-traitors

So no not surprising, we knew two years ago.

Abandoned because it hasn't worked - the original time line isn't relevant, it was there for a reason. It hasn't worked (ie hasn't addressed the reason for it's implementation) and is now being abandoned - quite sensibly. You can try and spin it any way you like.....

Valls is more honest....

“When we came to power, we made a strategic error. We didn’t tell the French people what the condition of the country really was: the level of the deficit, the debt and the trade balance,” he said. “The welfare state and everything the Left stands for has been blown up by the shock of globalisation, which was much greater than people realised. When we were beaten, we fell back on our Old Left ideology. We spent 10 years failing to prepare, and now we have to push through our ideological revolution while in government, which is much more difficult,” he said

So socialists pushing through austerity and Tories doing the opposite. As I said a topsy turvy world.

You can try and spin it any way you like.....

😆 That's exactly what you are doing !

We knew two years ago that it was a two year limited measure, but you are now trying to spin it that it is being "abandoned" !

@eric, the two year period was political doublespeak. The left keew people would move so they tried to say it was temporary to stem that flow. Everyone saw through that they knew the government would try and extend the tax, to make it permanent.

It has been popular with rank and file supporters of the left and yet the scale of the financial disaster means they've abandoned

And Hollande last month described his tax rises as "that's a lot....that's to say, too much." Following his finance minister who said that the French were fed up with paying too much tax.

Meanwhile the deficit will close on 100% of GDP next year. Bravo M Hollande, bien joue!

Austerity. The issue here is governments had very little choice, whilist the economic sun shone they borrowed and borrowed. Then the music stopped and the investors reduced their willingness to lend to governments. So at that point there really was no choice.

the two year period was political doublespeak.

No it was absolutely crystal clear, we knew two years ago. Let me repeat the quote from the article written two years ago in the Guardian :

[i]we now know, will take the form of a two-year emergency tax of 75%[/i]

There's no "double-speak" there. It says exactly what it means.

Keep spinning it Ernie - Hollande has one consistent track record and that is volte faces on most of his tax policies. This is just the latest in a well established trend.

No wonder his mates call him La FFer Hollande.

This is just the latest

😀 "just the latest" was news two years ago !

Two years ago we knew that the 75% emergency tax would expire after two years. But now you claim, quote : "No surprise that Fr is abandoning a tax policy".

Of course it ain't a ****ing surprise.......we knew two years ago !!!!!

And you accuse me of "spinning" ?!! 😆

Hollande has one consistent track record and that is volte faces on most of his tax policies. This is just the latest in a well established trend.

Aren't we meant to eat the rich, not tax them?

Well KB it helps if you follow French fiscal policy closely. Over the past two years, he has introduced, changed, withdrawn (even abandoned) many apaects of his tax regime (not just the 75% policy which he struggled to implement). Usually accompanied by headlines mentioning U-turns! The only certainty about French fiscal policy is that it has been, and is, an inconsistent mess marked by failed initiatives. No wonder the poor guy is so unpopular.

Cutting corporate tax rates while cutting spending - all from a socialist government. Tres amusant.

Usually accompanied by headlines mentioning U-turns!

Even if you had countless examples of Hollande U-turns this isn't one of them, despite your spin.

The closest it might have come to a U-turn would have been if he had ignored his own two year limit on the emergency tax and continued with it, despite what he had previously said.

But of course he hasn't, on this issue at least he's done exactly what he said he would do. Despite all your deliberately misleading spin.

Usually accompanied by headlines mentioning U-turns!

[i]Two years ago we knew that the 75% emergency tax would expire after two years.[/i]

Although we also know that it could have been extended.....

So why did the French allow the policy to expire?

Edit:
[i]emergency tax [/i]
Love this phrase, "Quick, we've failed to adequatley provde for a down turn and now we're strapped for cash... What shall we do? Rob the rich!"
Yay !
😆

@ernie, everyone on the left expect the tax to be extended, France has more of an emergency today than it had when Hollande came in, so had the tax actually worked it would be been extended as the emergency deepens. Hollande the least popular President of all time is trying to save face. The imposition of this headline grabbing 75% tax was one of his main election promises ("tax the rich they'll pay more") and it's been a disaster. As for other U turns the most significant has been further tax cuts elsewhere, mainly business related tax breaks (rather than personal) and an admission that France needs budget cuts (they won't call them austerity). He also promised to save a number of businesses from closure in Northern France inc a Michelin tyre factory which he has failed to do. Hollande rejected austerity and France's situation has deteriorated, it is the sick man of Europe. That's why his popularity is at rock bottom, his approval rating is 13%

Well if anyone wants to be pedantic about it, the policy wasn't abandoned it was aborted at the early stage and replaced by another version.

Bottom line - France has attempted to use higher taxes to reduce its deficit (along aside much needed supply-side reforms). Raising taxes has not worked and is now being reversed. It's all right our little socialist friends, it is ok to admit when things go wrong. Even GO did this and abandoned his austerity plans. It would be silly for Tories to pretend otherwise. The Tories and the Socialists have changed course - and so they should have done.

J'lya - agreed, just talked to French colleague and she was clear, the policy would have been extended if successful.

[i]What exactly is a wealthy pensioner?[/i]

They all live on our estate. One chap has a swimming pool and was bending my ear about how much it costs to heat it so he doesn't bother any more.

Every Saturday morning all the old folk get into their 5 Series and rive the 400 yards to the newspaper shop to buy their Daily Mails. Honestly, the newspaper guy doesn't buy any other newspapers, just this huge pile of hate.

Then they all drive back to their houses and read up on how immigrants (like the newspaper shop guy), are taking all our jobs.

[i]So why did the French allow the policy to expire?

[/i]

[img] [/img]

Hollandes policies have obviously failed, reforms across the EU on tax etc would have to be harmonized for it to work

It lasted for its intended 2 years and wasn't extended because it was unpopular and didnt raise enough money

As far as I can see a stronger economy would've been needed to support the upper level of taxation.

The French still live longer than us and work less, who's really laughing ?

France is blue, uk is red;
[img] [/img]

Of course in the UK we just provide tax cuts/ pay incentives for the big corporations, so they will come here and contribute to our society, I mean it worked well in Ireland, they had some great boom years....

[url= http://www.theguardian.com/commentisfree/2014/oct/06/benefits-corporate-welfare-research-public-money-businesses ]: of the 44 companies that received over £1m in government grants between 2005 and 2011, 13 didn’t pay any corporation tax at all; a further 17 didn’t pay any corporation tax either the year before or the year of receiving their public money. These aren’t two-bit firms, either: Farnsworth’s list includes Tesco Personal Finance, Dell and Plusnet.[/url]

@kimbers, well the government workers work less, a lot of private sector businesses especially in the big cities work UK hours (9-7 is typical although they do have a proper lunch). One of the reforms Valls mention was abandoning the EU working time directive (35hrs).

The French aren't really laughing as their country is looking increasingly bust so all those great unemployment benefits and generous pensions are in grave danger. They are just unafordable.

@samuri, good luck to those pensioners who have worked all their lives and been financially prudent. Most wouldn't have had access to credit cards or large mortgages as they where building their lives. It would have been the "mortgage queue" (ie save for many years with your building society and then wait your turn for a loan). UK pensions are subject to income tax just like your wages.

The 75% tax was ruled illegal when first mooted (2012?), the rate was so high it was determined to be confiscatory, ie theft, by the courts. The government then modified the proposals to make the tax payable by the employer and got that through the courts in late 2013. I think it may not have actually been in place even last year. However the threat of it has caused people to plan ahead and relocate, change their business practices etc etc. It has been financial disaster, totally counterproductive, they have lost tax revenue today even before the new tax has been put in place. Depardieu (bizzare though his move to Russia was) has paid over 100m euros in taxes in his lifetime, I recall his last tax bill in France was around 15m euros and now he pays zero there.

People on here have asked for examples of where high tax rates result in less money being collected and here is one, a glaring example of how counterproductive such measures are.

The 75% tax rate was an election sound bite for Hollande's campaign and it's turned round and bitten him and the French people in the @rse.

[i]As far as I can see a stronger economy would've been needed to support the upper level of taxation.[/i]
😆

[i]The French still live longer than us and work less, who's really laughing ?[/i]
Right, yeah, I can hear them laughing from here.... Oh, wait a minute, that's because... They are here.
😆

[i]People on here have asked for examples of where high tax rates result in less money being collected and here is one, a glaring example of how counterproductive such measures are.[/i]

[img] [/img]

😆

a glaring example of how counterproductive such measures are.

Wait. You're sayign that because this particular effort failed, then that proves ALL higher taxes result in less income?

Are you saying that if the UK 40% was raised to 41%, the same thing would happen?

[i]Wait. You're sayign that because this particular effort failed, then that proves ALL higher taxes result in less income?

Are you saying that if the UK 40% was raised to 41%, the same thing would happen?

[/i]

That is silly. Stop it!

Jamby, why do I get the impression that you are literally erect and throbbing with excitement as you type that? 😉

It was a very high rate, too high in the wrong place at the wrong time.
Scandinavian countries seem to do very well with relatively high tax levels, but with decent public services and better relationships between unions and business.

Getting all 'Tea Party' excited about seeing Hollande struggling in France as the right seem to be, doesn't help have a real debate.

[i]Jamby, why do I get the impression that you are literally erect and throbbing with excitement as you type that?[/i]

What? is that how you'd react....
😉
A thief thinks everyone steals....

[i]doesn't help have a real debate.[/i]
Way amusing, as the leftites have decided what the conclusion of any debate should be, before it's begun.
😉

Wait. You're saying that because this particular effort failed, then that proves ALL higher taxes result in less income?

No, he appears to be suggesting that increasing tax rates beyond a certain point will be counter-productive for raising further tax revenue. A discussion commonly expressed through the well know 'Laffer curve' - something that we've been told for years by the STW lefties is unproven fantasy - in fact I recall one of the usual suspects on here stating [i]"The laffer curve is a theory only given credence by the right wing. there is no proof of it and many reputable economists deny its existence. [/i]

Well, congratulations lefties, here's your proof 😆