[Closed] France abandons 75% tax rate

Anyone care to comment?

EDIT: Belgium has been the biggest beneficiary as it's a short train ride/drive from Paris and they speak French so they can run their business easily from there. The French in the UK are mostly here for better employment prospects, tax has been secondary.

The € is the elephant in the room at the core of all this.

...and he want les rosbifs to stop calling him "left wing and anti business" 😉

jambalaya - Member

Cameron was elected as he wasn't Brown.

And yet despite not being Brown he couldn't win the election. Staggering isn't it ?

aracer - Member

Though how do you know that he wouldn't be even more unpopular had he carried on pretending?

I don't know. In fact my abilities are so limited that I can't be sure of anything beyond what has actually happened.

What I do know is that Hollande has moved more and more to the right and he is now considerably less popular than he was. I'm sure of that.

Causation? 😉

You know I'm easily confused ernie - thanks for the clarification that you weren't trying to connect the two.

Read the post again THM :

He has in fact moved more and more to the right. Has this translated into greater approval ratings ? Not at all in fact the complete opposite, ie, he is now considerably less popular than when he was pretending to be left-wing.

Moving to the right has not translated into greater approval ratings for Hollande. We can be fairly sure of that.

Thanks for repeating it Ernie. Still not clear that the two are linked. He has changed his bed partner and his popularity hasn't improved is about as relevant.

His approval ratings reflect his incompetence. Then again watching Sarkozy at the moment! it desont look good either way. Mes pauvres amis!

But to repeat, I think political allegiances are less relevant than at any time. They are stuck with the same problems with no easy solution and no guide book of how to get out of it. On top of that, they have the €. Les pauvres.

It's not really hard to understand THM. jambalaya pointed out that Hollande is deeply unpopular, and you pointed out that he has reformed numerous U-turns.

I pointed out that despite moving more and and more to the right Hollande approval ratings have not increased, in fact the opposite has happened - he is now more unpopular than ever. It is a perfectly fair point to make.

Obviously that doesn't sit too comfortably with right-wingers like you and jambalaya who would prefer to portray him a leftie.

EDIT : btw THM do yourself a favour and drop the pretentious french speak, it makes you sound like Del Boy

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What I do know is that Hollande has moved more and more to the right and he is now considerably less popular than he was. I'm sure of that.

As I posted above if running a prudent spending policy is right wing then classify it as such but any working class housewife will know how the run a budget. He is unpopular because he has failed abjectly to deliver the economic miracle he promised the left (and in fact his voters are all worse off), his laisse-faire approach to immigration has seen huge defections from the far left to the far right and of course the right wing voters in France (not really right more center-ist in UK terms) always thought he was an idiot. Plus he's been spending 500,000 euro a year of the state's money keeping his girlfriend as "first lady" whilst nipping out every night on a scooter to see his mistress.

And yet despite not being Brown he couldn't win the election. Staggering isn't it ?

Well he got closer than Labour to a win and from the polls he's going to do better this time

Apparently British Cycling now has more members than the conservatives ....

His views are almost always at odds with reality/facts

JY Scottish Referendum ? 😉 My views are at often at odds with the accepted STW standpoint in a number of areas, not least in that I seem to agree with Government policy quite a lot both at home and abroad.

@andyfla Poll momentum with the Tories I think. Party funding these days is more about donors than members. I suspect the Tory party has more £ than British Cycling

There's an interesting conflation of popularity/personal rating and electability, which is often more connected with other ratings like economic competency and statesmanship. Nor does short term populism equate to good policy in the longer term.

Does anyone actually know how income tax actually works in France? Or is this thread just lots of hot air mostly about politics from people who are not aware how individuals, or say groups of individuals living under the same roof ( :wink:) pay their income tax? and what they actually get as a result of paying their income tax, compared to say other near-shore members of the EU? Or am I getting into semantics?

I would actually like to learn something, which is why I started reading this trhead, as it is quite relevant to me (and maybe more than most of you who may/ may not know what you are talking about), but unfortunately it all is 'a bit high up' for me to disseminate sufficiently......

Since when have the Belgians spoke French? or at least more so than English?

I haven't read the last two pages but BigDummy's posts about executive pay piqued my interest.

I personally think there is no causation between low income tax rates and growth in high earners incomes. This is much more to do with the growth of private equity. Managers of private equity backed companies can make multiple millions, therefore FTSE CEO argue they should have equivalent compensation to stop them jumping ship to a PE house. I don't propose to argue the merits of this argument but I think it is the driving force.

Why has private equity become so important? Because the post-tax cost of debt is cheap compared to equity - before the crisis this was principally driven by Gordon Brown's raid on pension funds and is one of those unintended consequences. By abolishing the tax credit he massively changed the relative cost of equity to debt to the detriment of equity. Hence debt become dominant. To those of a more technical bent, we became much more of a classical taxation system. If you look at classical systems, as opposed to imputation systems, they invariably have a higher level of corporate debt, hence the ubiquity of the leveraged buyout in the US, a classical system, and the UK, a predominately classical system.

Ernie, perhaps if you also chose to read, I have made the point that politics in this regards is largely irrelevant. It's "absurde" to suggest that Hollande is not left wing - albeit not excessively so. But the policy mix across Europe is very confused and it is also true that we have weird situations where LW-ish parties are implementing policies that are generally considered RW and vice versa. However, you only have to look at the subject or the thread and see what Hollande tried and failed to do to falsify any idea that he is right wing.

If he was, why would Valls be pleading not the be called LW?

As an aside, GO relaxation of austerity does put his policy mix in an interesting spot.

Since when have the Belgians spoke French?

Seriously? What language do they speak? 😕

[quote=mugsys_m8 said]Since when have the Belgians spoke French? or at least more so than English?

😯

Since when have the Belgians spoke French?

It would have a negative impact, the question is how significant. Cameron famously said he would roll out the red carpet to French entrepreneurs when the 75% tax was annnouced, the French response was that their citizens would be too patriotic to leave and would stay and pay the taxes. Oh how we laugh now ! There are 400,000 French in London, many are high earners. Rental prices in South Ken and local restaurants and business would certainly suffer I imagine they have paid quite a lot of UK stamp duty too.

EDIT: Belgium has been the biggest beneficiary as it's a short train ride/drive from Paris and they speak French so they can run their business easily from there. The French in the UK are mostly here for better employment prospects, tax has been secondary.

Well first, there aren't 400,000 French in London.

Second, can anyone give a grown up answer?

@el-bent - I will double check my 400,000 French in London but that's the figure I thought I read. As I said I think majority of French in UK where here before the tax policy as employment prospects are better. French business is very important to London, I am sure if you search you can find some stats.

EDIT: [url= http://lmgtfy.com/?q=french+population+in+london ]Is London France's Sixth Largest City ?[/url]

As per the links above my girlfriend is living here, she doesn't have to register etc etc so official numbers are likely to massively understate the figures. Even the French consulate number is a guess.

@mugsy - my girlfriend is French and I lived there for a year, am reasonably familiar with French tax/welfare payments (also have many French friends from sailing there a lot over past 10 years, so bar room discussion of tax/state beacracracy etc). I can ask the gf to look into any questions you may have. If looking at French tax you should include their equivalent of NI which is higher than ours.

For it they get generous unemployment benefits (also huge employer liability, if you are made redundant you are paid 80% of your salary for 2 years by your employer), state healthcare (but you pay first 20% of most things and many people have private health care paid privately), very good pensions. Downside is huge state sector (I forget the percentage of GDP spent on state but its huge), every town has a mayor and local state employees - huge overhead.

@el-bent - I will double check my 400,000 French in London but that's the figure I thought I read. As I said I think majority of French in UK where here before the tax policy as employment prospects are better. French business is very important to London, I am sure if you search you can find some stats.

I did that before and the commom consensus is there are 276,000 French nationals Registered in the UK, so I didn't need your link.

You seem to be steering away from the question I originally asked as well. I wonder why?

@el-bent, there you go 276,000 [b]registered[/b]. There are many non-registered as there is no requirement to do so. So given the 276k I think the total figure could be more than 400k.

I don't have the time to look up the economic impact these people would have other than to say it's clearly significant. There is a large concentration around the French consulate and school in South Kensington, one of the most expensive areas in London. These are generally high earners paying top rate tax, renting/buying expensive properties and spending money here. The French banks have more high earners in London than in Paris (not least as the high paid French would prefer to pay less tax in the UK)

Jambalaya.
Thanks for having a go at the calc.

[i]£250k earnings is roughly £110k in taxes[/i]
😯
While I acknowledge that figure is [i]rough[/i], goodness me, 110K is a lot of money to pull out of one person, although that alone, probably still wouldn't pay the fat-cat salary for the head of a City Council.
Notwithstanding, Mr/Mrs 250K then going out and spending the remiander.

[i]EDIT : btw THM do yourself a favour and drop the pretentious french speak, it makes you sound like Del Boy [/i]
I was thinking more along the lines of Edukator. Oops, that's done it now.

[i]You seem to be steering away from the question I originally asked [/i]
What? This one:
[i]How much of an effect on us will them pulling their money or their business out have?[/i]

... Very late to the debate but...

Whether the 75% rate was a sucess of not is not just whether it raised the tax take of the wider economic impact, but was it political posturing, polpularist rich people person bashing? The French govt must have known that some high earners would move abroad, but even better politicing - point the finger at the unpatriotic wealthy fatcats skulking away with their ill gotten gains! I don't know if it was a pre-election promise, if it was and it got the Govt elected then it was a success. I can't believe that French politics is so naive to be believe in an EU of tariff free capital and labour movement that the impact would not have been as expected - but the calculation was that the net impact is worth the expected political gains.

It didn't seem to make much if an impact in French papers yesterday - stuff about some Sarkozy funding scandal and the usual IS stuff as far as I could tell.

Tax policy (and for that matter spending) is only ever partly about raising income, it should be just as much about social engineering, but in reality is a lot of noisy tweaking that does little for either but a lot for political posturing.

The policy space for govts to act is massively constrained by EU rules and global markey norms. Step to far outside and capital moves, so talk politics but act little.

... ps by that I mean headline grabbing policy that has a big impact on certain groups eg bedroom tax, capping benefits etc, that may have a huge impact on the lives of those affected but do little in economic terms but are political posturing pre-election...

olddog, no worries on your timing, all views gratefully (if not graciously here sometimes) welcomed.

Yes the 75% rate was a political soundbite to appeal to the "working class" and to do some "rich-bashing". The claim that it was temporary was an attempt to keep the wealthy in-situ but many didn't believe that or felt economically it wasn't worth staying so left. I know some people who have kept money inside their businesses rather than pay it out and attract these high taxes (this is very negative for the tax take and the economy). I think the economics of the policy where not thought out at all, as posted it was declared illegal when they tried to introduce it so it clearly hadn't been thought out. As such not a surprise it's been a failure.

We too have out soundbite policies as well, the bedroom tax was poorly thought out also, the wrong solution to a real problem.

goodness me, 110K is a lot of money to pull out of one person

As always it depends how you put it and those who object to the wealthy being taxed seem to use such emotive terms for the way they're taxed. That £110k is money they've never seen - would it be more acceptable if they were paid £140k with no income tax, and their company was required to pay "employee tax" at 80%, so that money they have "pulled out of them" not only never appears in their bank account, it doesn't even appear on their pay slip?

You could of course argue that £140k is a lot of money to give one person in their pocket tax free.

Oh but actually I see you're already with me there:

although that alone, probably still wouldn't pay the fat-cat salary for the head of a City Council.

Yeah, how dare somebody earn more than £110k. Maybe we should tax all these fat cats lots of money.

+1 aracer.

People think 'Oh I'm paid £50k a year, great, but wait where is my £50k look at how much of my money the government are stealing, I wish I had more'

But it's not really like that. It's not YOUR money. The root cause of this is people wishing they had more, and fixating on the government as a cause of them not having more.

Tax policy (and for that matter spending) is only ever partly about raising income, it should be just as much about social engineering

Should it? It seems a really crude weapon to use for that, as you suggest one which largely just results in political posturing, and there's no doubt that such aims are largely behind the excessive complexity of the tax system, resulting in increased expense to administer and more opportunities to avoid/evade.

Of course one issue which as been ignored (I've been just as guilty) is that maximising tax revenues may not actually be the best for the economy as a whole. It's possible to envisage changes to the taxation system resulting in higher revenues, but a decrease in employment, GDP and growth. These things have to be balanced.

[i]Yeah, how dare somebody earn more than £110k. Maybe we should tax all these fat cats lots of money.

[/i]
11/10 for missing my point. I don't earn 250K (private sector worker here), yet my taxes go into the pockets of the private sector paid, public sector worker. I'd suggest not wasting your time going on about how those positions need to attract the [i]best[/i] from the private sector. It's clear to me, what they're really good at.
🙄

[i]People think 'Oh I'm paid £50k a year, great, but wait where is my £50k look at how much of my money the government are stealing, I wish I had more'[/i]
Ha, you've just labelled people as thinking that paying tax is the Gov stealing. Just speak for yourself, Yeah?

[i]The root cause of this is people wishing they had more, and fixating on the government as a cause of them not having more. [/i]
Nope, I've suggested that people should negotiate a proper wage in the first place and that share holders should be convinced that 20% ROI instead of 30%, is much better than an ISA.
How are the home made rollers coming along!

I think he did realise you were moaning about public sector employees but turned it round on you for comedic/pwning affect - ....WOOSH
try reading it again

You could of course argue that £140k is a lot of money to give one person in their pocket tax free.

Oh but actually I see you're already with me there:

although that alone, probably still wouldn't pay the fat-cat salary for the head of a City Council.

I would just have mocked you for the politics of envy personally but either way hoisted up by you own petard.

my taxes go into the pockets of the private sector paid, public sector worker

Ha, you've just labelled people as thinking that paying tax is the Gov stealing. Just speak for yourself, Yeah?

You not getting mockery when it is , preety much, all you do
WOW at the ironing

it should be just as much about social engineering

That's a harsh term for it, but the government DOES need to do things beyond simply funding services. For example, from a purely economic point of view it woul dbe better to have cars that were less fuel efficient as this encourages more spending on fuel, which increases oil companies profit, they increase operations, employ more people who then drive more faster cars and use more petrol etc.

The govt has to step in to avoid this, for reasons other than economics. Banded VED is one way to do this.

molgrips.
But it's not really like that. It's not YOUR money.

Whose money is it then?

[i]Whose money is it then?[/i]
Precisely, I was going to mention zero tax codings etc, but frankly, in light of recent posts, its a task I can't be bothered with. Horse to water and all that.

The point is, you couldn't earn that money without the rest of society allowing you to do so. The money isn't yours just because that is what is in your pay packet. There are 60 million people in the country, you don't get paid in isolation.

Molgrips.
The rollers you intend to make. How are they coming along? You know, the rollers that will cost you less than buying them, so that the VAT man doesn't steal your money.

Solo - Member

Molgrips.
The rollers you intend to make. How are they coming along? You know, the rollers that will cost you less than buying them, so that the VAT man doesn't steal your money.

Tenuous.

The rollers you intend to make.

When did I say I was going to make rollers?

I think you need to work on your reading skills 🙂