75% Income Tax on Highest Earners

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http://www.npr.org/blogs/thetwo-way.../french-president-tries-again-for-tax-on-rich

A 75% tax rate on the richest income earners?!?

Wouldn't that encourage people to negotiate salaries that lie either above 4 million euros, or that lie just below 1 million euros?

What do ya'll think?

 

I would think so. Why earn more if 75% of it is going to the government. Makes no sense to me. If I did the math correctly someone earning 1 mil Euros would actually receive 25,000. I am also sure that those earning those high incomes hire people, housekeepers, gardeners, nannies, and what all. With their income cut down some of those people would be laid off. More unemployed?

Doe they mean a 75% tax on any amount over 1 mil? The article says he wants to impose a "morality tax" and doesn't expect to raise much revenue. What is immoral about getting the best salary you can? Hokay I admit I am confused. The company paying the salaries will be taxed? I haven't found a link to the actual proposal. Maybe I am just missing it.

 

The whole idea of a morality tax sounds not only incredily politically naive (I mean, this guy is the President of a state and a career politician, so he can't be politically naive, can he?) but also almost, arguably, immoral itself. (Though I suppose one can't successfully argue to an ardent socialist that requiring successful people to give up nearly every part of their income to the state is in itself wrong).

I wonder if this is simply a ploy, some sort of way to advance some other agenda, but I simply have no idea what his agenda really is (since, basically, American newsrags barely cover anything that happens outside of LA, NYC, or Washington DC, and even less so once it's outside of our borders).

I'm wondering if there are some French posters who might provide some insight.

 

Well, FDR's system of taxation stopped any individual making... what was it about about 500,000/year in today's terms? And was brought about when times were tough. Sure business had to be dragged kicking and screaming, but FDR only had to explain that if big business hated paying high taxes, there was something worse and if the USA didn't get it's house in order quickly it was coming, communism.

You could argue such high taxation rates were a sort of legislative communism, but the rates were only temporary, whereas real communism can't just be turned on and off.

I don't really know what else to say, history has shown time and time again that when you create an underclass that they eventually get really, really angry and all of society ends up worse off when racism, communism, extremism, and the other usual isms find fertile soil to grow.

 

I'm French, it is a ploy and there has been much controversy about that over here.

Half the French population earns less than €1,500 a month which amounts to €18,000 a year before taxes. That wouldn't be so bad if we could enjoy low prices but we don't. A pack of cigarettes or a pint of beer cost more than six euros... Do the math if you're having a beer and some smokes.

Add the fact that we are being told that economic austerity is the only alternative and that it means no increase in wages, unpaid overtime, more unemployment and severe cuts in public spending.

What the French president is putting forward is not so stupid when you come to realize that some segments of the economy are actually thriving because of the crisis while the majority is suffering. The middle class is shrinking but the incredibly rich are definitely prospering.

There is also the fact that we have a large number of tax evaders in this country. Simply put anyone who is making really serious money is cheating the taxman which in turn means that average citizens (the ones who are not filthy rich nor destitute) are the ones who end up picking up the bill.

Of course in the end the fact that French politicians are accumulating mandates probably cost the Republic even more money than taxing the incredibly rich would yield. But you can't expect politicians to cut on their wasteful use of public money, now can you?

Nothing when it is earned in a respectable and moral way and not the result of shady dealings or obscure transactions.

France is at heart a Catholic country. We may have separated the State from the Church and we may look up to Atheists but we don't see being filthy rich as something to be proud of. We don't have a Protestant culture and to us morality and wealth are radically opposed values:

"It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God."

Do you know that they sell more convertibles in the UK than they do in France? It's not that the French can't afford them and it's not that the weather isn't better in the South of France, it's simply the fact that driving a convertible is a display of wealth that can be seen at best as frivolous at worst as callous or even vulgar.

When someone associated to the former French president said that if by 50 you didn't have a Rolex you were a failure there was a public outrage.

 

dogsoldier,
75% ??! Before talking about taxing rich (or their corporations for that matter) people 75%, having them at least pay 25% would be a good start.

With a clever tax attorney and a smart accountant they legally manage to pay far less than that. Gut these exceptions and loopholes I say. One discuss the merits and demerits of raising taxes further once that is accomplished.

That said: A 'morality tax' for the rich or something has, at least in my country, reliably been found to be unconstitutional, for good reason IMO, even though that doesn't discourage the odd leftist to call for it every election cycle or so.

 

You run the risk of alientating the rich and forcing them to tax havens if you go way over the top like that.

 

I contest the notion that the rich flee to tax havens, compelled by high taxation. They go there by choice because they have the option to do so.

You and me and dogsoldier don't have that option, because like most people here we are (probably) employed (as least I am), and as a result bound to a specific locale. Also, we simply can't afford the clever tax attorney and the smart accountant that rich people employ to get to to tax havens.

That's the dirty little secret that all the folks who are calling for a presumably fair flat tax for all are obfuscating. The rich play in a different league than the Middle class, and have not only far more options, but also a vastly greater financial leverage.

 

Without seeing the law itself, I can't say for sure, but the tax system in all countries I'm aware of is progressive, so yes, it's only on the amount over 1 million Euros.

Or, to use a US example, when Obama got his tax increase through on people making over - jeez I forget the amount - I know he was asking for over $250,000, but I think it ended up being $400,000 or something like that. Anyway, the 2% increase isn't on your entire income, it's the income earned over that threshold.

But the entire system is progressive. Everyone is entitled to their standard deduction, and you don't pay any taxes on that income earned. The first bracket where you actually pay a tax is 10%, and that's also on very low salaries. It gradually increases the more you earn, but the increased rates only apply to the income earned over that threshold.

It would be 250,000 Euros for starters. And you'd actually have to earn 2 million Euros to see that kind of tax bill, because the first 1 million wouldn't be taxed at that rate.

That said, I'm not sure how much income that would actually bring into France. It is true that the US has millions of millionaires, but that's measured in terms of total worth - in many cases acrued over the course of a lifetime. I seriously doubt that there are that many people who have annual incomes that high. I haven't checked the exchange rate lately, but I think 1 million Euros is around $1.3 - $1.4 million.

There can't be that many people in France making that kind of money. The number has to be well under 1 million. It's probably more like the tens of thousands of people. But how much are you actually going to take in with that small of a tax pool?

 

France is in the top ten when it comes to the number of millionaires but what is at stake here is income, not assets.

Not much, that's why it's a PR stunt.

Besides it's doubtful that this measure could actually be validated anyway... The way I see it the president wants to please his electorate and increase his popularity (which is at its lowest at the moment).

The current French administration is "socialist" in name only, living here I can tell you there isn't much of a difference with the previous administration.

Not only that but over here they are also very vocal. We have a bunch of shameless tax evaders who are complaining on TV when the average single French citizen is paying almost a month in income tax (and that hurts when you're making less than €20,000 a year).

 

My perhaps uneducated opinion as a lawyer and entrepreneur (I'm not a tax specialist or economist) is that the best thing to do would be to simplify the system, even if that'd mean removing some of the breaks. Making the thing simpler allows the taxpayer to save some expenses by braving it alone. My accountants probably cost me more than 50% of what I pay in tax money. As much as I like my accountants, I'd be happy if I could split the difference with the state. I'd still be in the plus in the end anyway. 25K pages of a tax code is not something that should be there. The volume are complexity of tax laws these days are an absurdity, including by reason of how much they must be costing the taxpayer, although I can't honestly say I'm 100% sure they aren't necessary because of some factors exceeding my knowledge.

I oppose the idea of >50% tax rates. At that point it shouldn't be called tax, it's dispossession.

And I'm not a fan of the negative processes Caradhras describes. I feel the euro was a mistake and I don't want it in Poland. I think capitalism has failed its exams in practice and needs some reins in order to prevent the rich from getting richer at the expense of the poor getting poorer. There's nothing wrong with people being richer and there are people who are poor for reasons for which they're at fault or perhaps nobody is at fault. But I don't want a system that can essentially be milked by some guys at the top.

 

Good luck with that. I can't speak specifically for Poland, but the disparity between rich and poor in the US is shocking. Someone in the top 5% of income earners in this country is closer in salary to someone in the bottom 25% of income than they are to the people in the top 2% of income. The problem is the rich are really, really, rich. Like "having more money than you can spend" rich.

 

You could raise quite a bit of revenue without raising the tax rate one bit, and just closing loopholes and tax havens. Tracking the money that goes to such places is not the easiest task, but some research suggests that the total amount of wealth hidden in these tax havens by wealthy individuals is somewhere in the area of $21 -$32 trillion. That's a lot of taxable money right there.

 

Wealth is not income. If you put $1,000,000 in an interest free checking account, you would pay $0 in taxes. What you are talking about is basically stealing people's money. Have you ever heard of Cyprus?