France budget: Taxes favoured over spending cuts(76 Posts)
Great to see one country brave enough to tax the rich instead of punishing the poor.
sparrowp - i'd be interested to read about the recent economic research which found that the optimal tax rate was 45-75%, do you have a link?
I suspect you'd think differently if you were facing paying 75% of your income.
It's easy to say "Oh well if I earned that much then I'd happily pay it."
The problem with such a tax rate is not so much whether or not someone should pay it. That's for the government and law to deal with. The big problem is that it puts people off working and taking risks.
Let's say I started a business which over the years grew and grew. Now I'm lucky to earn over 1m a year. I can only do that by employing a lot of people. I'm happy. Except now if I want my business to grow, I have to take risks but only get to keep 25% of the reward. I'm already pretty wealthy. So I would probably decide it's not worth it. So the result is that I do nothing, earn no more and create no new jobs.
That's why France is on the verge of panicking and they're basically using national pride as the reason why their citizens should pay up.
Factor in that under the EU, anyone can move freely and set up somewhere else then such a punitive tax seems just ridiculous.
The recent economic research found the optimal tax rate was between 45 - 75%.
The 75% rate in France applies only to incomes of over E1million a year. Earn anything below and you pay the same tax as everyone else. I think 1 million is quite a substantial sum, certainly a massively rewarding sum and certainly enough to enjoy the highest standard of living.
It would be churlish not to contribute a little more of your earnings over that level to the country that gives you so much.
Agree with breadandbutterfly
Besides, there are plenty of tax mechanisms to make money stay when people go. American-style geography-blind taxation. Russian-style triple tax rates for non-residents. Thailand-style tax bites on transfers out. Not sure would all of them work within EU, but there is a lot of space for manuvre.
If I paid 75% tax I would leave the country.
With the internet it is so easy to do business from anywhere on the planet.
That said, I DO think people who choose to live in the UK should pay a fair share of tax and not just enjoy the benfits of our society and pay nothing or very little.
I also think companies that operate here should pay a fair share of tax. There is a social contract that has been broken by multinational firms and wealthy individiuals in recent years and that is where the 'unfairness' stems from.
If you look at the history of tax in Sweden they have reduced their tax rates with more normal being 50% whereas in the UK the rates would have been higher with 50% plus Ni at 2% for high earners. Wher did bjorn borg live when rates were higher. France are treading a very dangerous path and I have seen many execs at my French-run company already becoming resident in the Uk. Perfectly possible to live in London and commute to Paris by euro rail when required.
Plus Scandanavia is far richer in natural resources, generally have small populations against land/resources etc. the total population of Norway is like that of Birmingham. You cannot really compare Ireland that country Ireland which is a completely different country and affected greatly by the Euro. Scandanavia kept their own currencies. Was in Copenhagen yesterday btw. Lovely country.
Bread. Your theory on Scandanavia is worth considering. The tax rate is higher and they have free universities etc but they also demand much higher salaries as the cost of living is so much higher. It is very protective certainly in Sweden so very difficult for other EU members to work there and unemployment is higher than you think. As a company looking to invest in a country, it is not one that would spring to the top of the list. Higher taxes often have a knock on effect of the attractiveness of companies to invest and with investment comes jobs.
I am totally against raising super tax on the rich. Again close down the loopholes but personally I would rather have lots of millionaires paying 45% of their income than nothing. Btw I am nowhere near but would rather have their tax to support the normal working person in this country than elsewhere.
Brave enough to tax the rich
More like dumb enough to hold on to inflexible political and economic ideologies, no matter what. The French scorn and bitterness towards the success of others will continue to stymie the nation for generations to come. But that's their choice.
Even with the restrictions on pension contributions for higher rate tax-payers, there are still ways to minimize personal tax paid, for example, VCTs.
I think some of you are being very naive to think that people who work harder, are more highly skilled, and just smarter, should not try and minimize paying almost criminal amounts of tax, as in France's case, and to a lesser extent the UK.
So no, I wouldn't say that France is 'brave' I would say they are 'thick as bricks', and understand that the exodus to Belgium is already underway.
The number of people declaring incomes of over £1 million in the UK fell from 16000 to 6000 after the 50% tax rate was introduced, with the amount of tax paid falling from £13.4 billion to £6.5 billion according to HMRC
Since the announcement that the top rate would fall to 45% from next April, the numbers are back up to about 10,000.
So it doesn't matter whether you think they are greedy bastards or not, when the tax rate is perceived to be unjust the rich take steps to avoid it - they move abroad, reduce their working hours or delay payments; so if it doesn't raise revenue, why do it?
The 75% rate will be a disaster for France but will ultimately serve to remind the UK electorate of why we should never vote for a socialist government.
Grimble, I believe in the concept of a universal benefit.
The problem is, we can't afford it (people simply do not understand what a patronising unfair CON the welfare state is, and they really do not understand who actually pays for it).
Britain could have afforded it once, during the North Sea Oil boom (as well as set up a Singapore-style forced pensions savings central fund). Give everyone a set amount of money, and it was up to them how they lived their lives (best way).
But unfortunately that vicious evil uncaring woman Margaret Thatcher was persuaded by the Tory wets and wasted most of it - on welfare payments to the poor.
France is a madhouse. Hollande is disaster for the country.
I read Gerard Depardieu's rant yesterday, and totally agreed with him! (and I've always thought him a bit of an ogre) I think it will turn many away, I'd go if it were me.
' I certainlywould resent even giving 42p in each £1 to a state to spend on wars, a load of sexist soldiers we don;t need, foreign aid (ie corruption) never mind a mass of benefits claimants and scroungers adn the 50% who never pay tax'
But then how on earth would the country be able to subsidise windfarms? This is not about an extra penny in the pound here and there, this is about "saving the planet".
"There must be a stage as tax rates get heavier at which the tax take goes down"
There has been a lot of work published in this theoretical highest tax rate at which tax revenue would be maximised. It is called Optimal Tax. Latest study I read about places this rate at about 33-35%.
France's new 75% tax rate is the work of an ignorant government with mob-appeasing tendencies. Anybody with a single semester's worth of Econ lessons could tell you that such a tax policy is pointless and indeed counterproductive, with lower tax revenues the most likely result.
If the Government gave everyone, say £10,000 when they were, say, 18 as a start in life and to do what they liked with, what do you think would happen? My bet is that some would stick it in a bank, some would look around for an investment and try and grow it, some would use it to maybe start a business, some might give it to good causes and some would blow the lot on a holiday or a car or food and booze. There must be scores of permutations.
People are all different with different motivations, creativity, energy, foresight and even risk-taking attitudes.
No amount of Government trying to socially engineer society will produce what some perceive as fairness because no one can agree what fairness is. Some on here think it is not fair that some have a lot more than others who may work really hard doing vital jobs, while the opposite argument is that it is not fair to punish people who have the energy and drive to become the country's financial engine and create jobs for those who are happy to have someone else provide them with a job.
The best we can do is to set tax at a level that maximises tax take without alienating those wealth makers who already punch way above their weight in tax terms. Anything over 50% is, I believe, legalised theft
'Great to see one country brave enough to tax the rich instead of punishing the poor.'
And how is that working for them now, Bread?! .
There are certain facts of life that even lefty right-ons cannot prevail over. And that is, if you tax capital, capital moves.
There are two other facts of life that lefty caring right-ons also don't like acknowledging. So here they are, in a right hook and an uppercut:
1. People don't get rich because they are 'privileged'. It is a result of hard, hard, hard work. Work at school, college, taking risks or starting at the bottom, working 12 hour days. IT DOESN'T JUST HAPPEN. 'The only place where success comes before work, is in the dictionary' - Vidal Sassoon.
2. If you too stupid to work at school, too undisciplined to hold down a job, and too immature to sustain a committed relationship or NOT get pregnant, YOU WILL BE POOR. AND NOBODY DID IT TO YOU EXCEPT YOURSELF.
[The two biggest mistakes built into the welfare state, are that benefits accompany babies. And that working gets punished. It goes against human long term self-interest, it is the cause of a lot of actual misery and it is plain wrong.]
These are the hard truths that politicians are too wimpy to spell out. Face it, why should 1. work that hard, to have to give away most of their effort to subsidise 2.?
Why should they? THEY WON'T. THEY NEVER HAVE, AND THEY NEVER WILL. Because, actually, it is unjust and goes against the ancient law that will NEVER be countermanded, 'what you put in is what you get out'. They leave, to places that don't have stupid lefty pie in the sky entitlements, like Hong Kong and Singapore.
I think you make the mistake of thinking everyone is as greedy as you are - Scandinavia and Germany work just fine with higher tax rates - people there don't all down tools (or mobiles or whatever) just because the tax rate is higher.
cogito - i am jealous of rich people's security but not at all of their yachts or whatever - if I had millions I'd still dress in cheap clothes because designer stuff doesn't look any better to me and I can't see the point. I care if my shoes are comfy not if they have some stupid branding on and would avoid expensive stuff for its own sake every time.
I'm not knocking people who give to charity - even if they just do it to be tax efficient - but I am absolutely knocking someone who thinks that 'they' have earned millions on their own. No-one has - someone who sets up a company selling popuar widgets, say, doesn't make that on his own - he owes that success to the people who design the machines, the marketers, even the people who work in the widget factory. They should all share in that walth. I'd much rather see a John Lewis model, where the wealth that is earned is shared among all those who contribute towards it.
I don't think many people would call John Lewis communist though i daresay to some on this thread it is - I'd call it the acceptable face of capitalism.
I could well have been me although I rather like the fact that one of the biggest yachts in Europe is owned by a female hedge fund owner. Good for her.
(breadandbutterfly mentioned 'pointless yachts', not you Xenia.)
I certainly think people can spend their money on whatever they like. I am not a yacht fan but there is no reason spending on a yacht rather than a charity or school fees or a cottage is any better or worse. I was just making the point that the rich who give to charities have got a bit fed up that this Government has suggested they do it to evade tax when in fact mostly they do it because they are good when they might well have spent it elsewhere. I'm not rejalous of rich people at all. I get villified on here for mentioning I have a private island and a big house, not that I go round in real life showing off about it. I come from the position that once someone pays a fair amount of tax it is up to them what they spend their money on and that fair amount of tax could be 20% flat tax and no more.
I believe unfairness is fine and that we are all born either happy, sick, ill, pretty, genes to be tall or short, nice or nasty, high IQ or thick as a plank and that is how our species has survived by its differences and survival of the fittest and thus it is wonderful if some people earn a lot more than I do and not a problem if some earn a lot less. I believe the test we need is absolute not relative poverty and as money does not make people happy it does not matter at all if someone has more money than someone else and the poor can be just as happy as the rich.
"once you have enough to buy pointless yachts "
I suppose everything you buy is strictly functional and utilitarian? That 'pointless yacht' has been built & fitted by craftsmen, sold generating a profit for a company employing sales staff, delivered by more people and will be berthed at vast expense in some marina manned by yet more people. If you're jealous of rich people just say so but it's not really a sound reason for taxing someone so that all they have left is the same disposable income as everyone else.
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