I’ve mocked France on several occasions, and I thought Sarkozy was so bad that I figured (in the long run) the election of Hollande was a step in the right direction.
But in certain ways, France isn’t as bad as the United States.
The New York Times has a big story about French entrepreneurs and investors looking to escape looming class-warfare tax hikes. Here are a few excerpts
Benoît Pous-Bertran de Balanda, the descendant of a French general who fought for the Americans, is trying to help his wealthy countrymen escape what he calls the tyranny of a new Socialist government primed to severely tax the rich. …Well-heeled French citizens are scouring real estate opportunities in neighboring countries like Britain and Switzerland. The United States — particularly New York and Miami— is also drawing French investors looking to pick up rental properties or pieds-à-terre, brokers say. The French buyers most active in recent months are generally looking at properties between $500,000 and $5 million, brokers say. What the French are so concerned about is Mr. Hollande’s campaign vow to tax income over 1 million euros at a 75 percent rate. …it will also raise the tax rate on capital gains to the same level as the tax on ordinary income.
Normally, this type of story would be an excuse for me to write about the Laffer Curve and the foolishness of penalizing success.
But I want to focus instead on the right to emigrate. Specifically, there are two ways in which France has better policy than the United States.
1. France, like almost every other civilized nation, does not have worldwide taxation. So when French citizens move to Switzerland, Hong Kong, or the United States, they pay tax to those nations. But they’re no longer subject to French taxes on this foreign-source income. Sadly, that is not true for overseas Americans, who are subject to tax in the nations where they live AND the IRS. Their only choice, if they want to escape this punitive and unfair form of double taxation, is to give up U.S. citizenship.
2. But when Americans like Eduardo Saverin decide to surrender their passports, they are hit by punitive exit taxes. This is the type of policy normally associated with some of the world’s most odious regimes, such as Nazi Germany and the Soviet Union. France, I am told, is not perfect in this regard, but the tax treatment of people re-domiciling in another country is not nearly so onerous (especially if they go to another EU nation).
I want good tax policy, like the flat tax, regardless of what’s happening in other nations. But it says a lot (and none of it good) when one of the world’s most statist nations has better policy than America.
