Despite all the ballyhoo around President Hollande’s determination to squeeze the rich with a 75% tax, he has finally admitted that it wasn’t working, and that it will be dropped for the coming year.
This news comes too late to put in our new book, Flight of the Golden Geese out in February, where we warned that the policy was economic lunacy/suicide. And so it has proved.
According to the French finance ministry, a mere €260m was earned in 2013 from the supertax, and this even dropped to €160m in 2014. Hardly surprising that France’s budget deficit soared to €84.7bn.
What these figures don’t show is that second-order tax income will also have dropped substantially because of this tax, probably by an amount even greater than the sums raised. French business has been badly hit by the consequential fallout of the policy, which impacted employment, which hit the income tax take from ordinary Frenchmen and women.
This about face is just the latest of a number of U-turns by Hollande’s government, all going to show that in today’s economic climate politicians are no longer in control of national destinies.
You can already hear Ed Miliband bleating “Soak the rich” as he frantically tries to hold on to the leadership of the Labour Party. Soak the rich? They’re already thoroughly drenched.
HMRC have released figures for 2013 showing that top 0.1% of income tax payers handed over 11% of the total tax take. Even more surprising, the top 0.01% paid 4.2% of that total, the same as the bottom 30%. Putting it in another way, the 3000 wealthiest individuals pay the same amount of tax as the bottom 9 million.
And this is under a Conservative government! If it gets any worse we will all be deafened by Golden Geese flapping their wings as they fly away.
A very interesting point made in the Economist of 20 September, 2014. The number of people paying income tax is dropping, and this is highly dangerous for national economies. In our ‘farmyard’ video we said that 1% of Americans pay 40% of income taxes. That was then! Today the figure is 46%. In 1979 (just 35 years ago) it was a mere 18%.
We can’t be too smug in the UK either. 1% of workers pay 28% of income tax. In 1979 it was a mere 11%. More than 40% of American households pay NO income tax. In the UK the number of income tax payers has dropped by 2.2 million. And with populist politicians spouting `squeeze the rich` rhetoric, this can only get worse.
Many rich American/British High Net Worth Individuals see these numbers as a wake up call. The way the figures are moving makes low-tax foreign jurisdictions look more and more attractive. If, as we predict in our upcoming book, these HNWIs turn into Golden Geese and fly away, then this will have a hugely disproportionate effect on tax revenue.
My friends say I have a one-track mind. I’m always thinking about a three-letter word ending in X. … TAX.
It seems I’m not the only one. For yesterday in the House of Commons MP Ben Gummer stated a fact that has always irritated me. His bone of contention was National Insurance. For non-Brits I should explain that British subjects who earn more that £149 per week has to pay 12 per cent or more of their earnings on a so-called contributions based scheme that supposedly pays for various sickness and unemployment benefits and pensions. Gummer says it is a stealth tax masquerading as a social good.
National Insurance is a sanctimonious euphemism, it is a tax mechanism for redistributing wealth. The state should come clean and admit that it is nothing less than an ‘Additional Income Tax’.
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