Gains and Losses of France from 75% Tax for the Rich

Exactly 4 years after the summer of 2008 the whole world has thrown itself into global economic crisis, which makes politicians of different countries come up with urgent “anti-crisis programs” and “recipes” that can if not prevent then at least reduce the rate of budget deficit growth in many countries worldwide.

The brightest example of “anti-crisis measures” has been provided by republican France, which introduced “tax for the rich” in July 2012. According to it, citizens whose annual earnings exceed 1 million euro are obliged to pay 75% to the treasury.

As stated by Minister of Budget Jerome Kauzak, the government will consider the question of introducing such tax when deficit is overcome. According to the specialists of French Ministry of Finance, this tax may be included into the budget of France for 2013 and will be kept for 3 years.

Is it fair for the rich to pay more during crisis? Judging from the first feedbacks in Russian and French blogs and social networks, the answer is unanimous – yes.

Russian-speaking bloggers from Ukraine, Russia, and other CIS countries unanimously write “if only we had the same” for a good reason, as summing up the amount that Russian billionaires would be obliged to pay if State Duma of Russia (instead of looking for “foreign agents in Russian media”) implemented similar law in relation to:
- Vladimir Lisin (whose finances, according to Forbes, amount to 15.9 bln. dollars, owner of Novolipetsk Metallurgical Plant);
- Aleksei Mordashov (15.3 bln. dollars, owner of “Severstal” and “Power machines”);
- Vladimir Potanin (14.5 bln. dollars), Vagita Alekperova (13.5 bln. dollars), and other Russian billionaires.

Will such law bring France economic benefit? Why has none of the millionaires complained about the case, has not torn apart the passport of French citizen in public, has not immigrated into the country with smaller income tax? Certainly not because they are patriots of their country: their business has become transatlantic, international, where profit is at first place, not citizenship.

Experts: France is already having political and short-term economic effect from the tax for the rich

in France gave the following comments about “tax for the rich” in its interview to the “Market Leader”:

1. New President of France Francois Hollande, as a true specialist, has given a good example of “protectionofworkingpopulation”, which is one of the main slogans of European specialists: the decision is very simple and clear: the rich will pay more, consequently, the poor are supposed to receive more.

2. Everybody liked the slogan, so, during the next meeting of Socialist International (includes 156 socialistic parties from 126 countries) the President of France may receive a great ovation and become the leader and the symbol of socialistic movement worldwide, showing “fraternal parties” (for example, the eternal competitor about influence in Socialist International – oppositional German party of Social Democrats) how to talk and fight with competitors such as Angela Merkel from conservative Christian-Democratic Union, who keeps protecting the interests of entire European Union and EURUSD.

3. Many private investors around the world have immediately expressed their belief in the program of the French government. Rather successful auction of French government bonds has been held in this context, discussing the adoption of the law. Today Paris has earned 8.96 bln. euro from selling debt securities, as informed by Bloomberg Agency.

What is more, today yield of French securities has become one of the most profitable worldwide. If bond yield used to be low and securities due till July 2017 would amount to 0.86% with only 3.34 bln. euro sale on June 21, then today in the circumstances of strong propaganda PR and rapidly risen investor trust to France Spanish auction has reached the record of 7%.

What is unwritten in media and unknown to most world citizens?

One year ago in August 2011 French billionaires, represented by the owners of L’Oreal corporation and the head of Total company, made a self-initiated (!) address to Sarkozy, appealing to raise taxes for the richest citizens of the country on a temporary basis. Is it logical? – you may ask. The logics is simple and clear to those who are informed about the way of doing big business worldwide, as explained by the experts of .

1. Taxable personal income per year and wealth are two things. For example, if Forbes estimates the wealth of French billionaire, owner of Le Monde Xavier Niel as 4.5 bln. dollars (shares, bonds, villas, cars, etc.), he will pay 75% not of the sum of 4.5 bln. dollars, but of the “personal income” that he officially pays to himself for this year (probably less than 1 mln. dollars in order to pay by smaller tax rate).

2. There is a “sheet anchor”, namely offshore companies, many of which (Panama, Belize, etc.) do not pay any taxes. Therefore, a part of millionaires’ purchases (from expensive cars to fashionable apartments, from paying restaurant bills to buying brilliants) can be done by the bank cards of their offshore companies, thus not breaking the new law.

3. In case of extremity, one may change citizenship within the EU. However, none of French billionaires needs such extreme case. Experts of international forex broker company NordFx have explained that the countries have very similar tax rates for the rich:
- Luxemburg has the lowest tax rates, it even has zero tax, and maximal tax rate for the rich amounts to about 40% of annual income;
- in Poland tax rate ranges from 18 to 30 percent of income;
- in Great Britain the income exceeding 7475 pounds annually (about 12 ths. dollars) is charged by 20% tax rate, 40% is paid by those, whose annual income is over 37 400 pounds. Awarding fees over 100 ths. pounds are charged by 50% tax rate;
- in Germany minimal tax rate is less than 20%, and maximal – over 50% of income;
- Ukraine and Russia have progressive taxation scale, taxes for the rich have not taken on here, and people stopped using them about 10 years ago.
- in the USA people earning over 1 mln. dollar per year pay 18.3% of their income. However, in his annual speech to the nation this January Obama has stated about the necessity to increase tax burden of the rich. In particular, he suggests setting 30% tax rate for Americans, whose annual income exceeds 1 mln. dollars.

Experts conclusions: beautiful political slogan of 75% “tax for the rich” in France, adopted at the suggestion of French millionaires and billionaires is a candy with a beautiful paper, which is used to calm down the world, according to the experts of “the best European forex study project in 2009-2012” – Masterforex-V Academy. It has given unexpectedly strong political and short-term economic effect (French outstanding amount has risen by over 11 bln. dollars), but has not eliminated the sources of global crisis.