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November 24, 2015

What Bernie Sanders Can Learn from a New York Times Reporter About French Tax Policy

 

Radio talk show host Terry Gross, whose “Fresh Air” program is widely broadcast over National Public Radio stations, had Elaine Sciolino, a writer and former Paris bureau chief for the New York Times who has lived in Paris since 2002, to discuss France and the recent terrorist attacks. 

Gross asked about reports that Jews had been fleeing France because of growing anti-semitism. Sciolino had a very interesting response.  

“I can tell you a lot of people are leaving France. … Half of my American friends have left France. French people are leaving France. Other Europeans are leaving France. And French Jews are leaving France, and it has nothing to do with anti-semitism or terrorism. It has to do with new tax laws that put such a high tax burden on anyone in France that a lot of smart people are saying I’m going to live elsewhere.” 

She goes on to explain that as long as a person lives six months plus one day outside of France that person can avoid French taxes.  

And it’s easy to see why some would want to. French President Francois Hollande, a self-proclaimed socialist (much like Democratic presidential candidate Bernie Sanders), imposed a 75 percent tax on income over €1 million.  

But because of a special provision imposed on 2011 income, Reuters reported in 2013, “More than 8,000 French households’ tax bills topped 100 percent of their income last year, the business newspaper Les Echos reported on Saturday, citing Finance Ministry data.” 

That’s what Sanders might call a good start.  

But he needs to be aware that Hollande dumped his 75 percent rate a year ago because it wasn’t bringing in very much money— €260 million in the first year and €160 million in the second—compared to the €84.7 billion budget deficit. And he was driving the most successful and productive citizens out of France. 

While Sanders has hinted that a 90 percent top marginal tax rate wasn’t too high, he has recently implied that his tax plan, when it’s released, would likely have a lower top rate.  

Hollande may have learned a costly lesson, let’s hope Sanders won’t make the same mistake.


 

  • TaxBytes-New

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