The socialists in France are planning to put a 75% tax on the richest Frenchmen. Much to their dismay, this policy is starting to have consequences.
Bernard Arnault — the richest man in Europe — has ignited an uproar in France over taxes, citizenship, patriotism and what policies the government needs to promote growth.
It’s a pretty impressive achievement for one little statement.
Arnault — the CEO of French fashion giant LVMH, owner of houses like Louis Vuitton and Christian Dior — is the symbol of France’s treasured luxury fashion industry.
So when the face of “Made in France” confirmed Sunday that he had applied for dual citizenship in Belgium it struck deep chord in France’s national pride.
Despite his protests, many thought it was an attempt to dodge the new Socialist government’s planned 75 per cent tax on the country’s wealthiest.
One French paper’s front-page headline called him a “rich jerk” on Monday and French President Francois Hollande questioned Arnault’s patriotism.
But beyond the name-calling, the debacle highlighted a very French contradiction: A country that prides itself on producing exorbitantly-priced luxury fashion has tax policies that target the very people rich enough to buy French goods.
Arnault is the world’s fourth-richest man, whose personal fortune Forbes magazine estimates at $41 billion.
His application to Belgium comes as Hollande prepares to implement a 75 per cent tax on those that earn more than €1 million ($1.28 million) a year — although it was hinted the plan could be watered down.
First of all, as the late, great Milton Friedman would have probably said if he were still among the living, this is an opportunity for a natural experiment. There are liberals all across Western Europe and the United States who dream of soaking the rich. Well now, France is poised on the brink of achieving that dream. Let’s hope that it does and see what happens. If so, my expectation is that France’s wealthiest citizens will flee the country, stop producing, cheat on their taxes, hide their income, and do whatever else it takes to protect their money. That would lead to the tax bringing in considerably less income than expected and would cause a slowdown in economic growth. Whatever the case may be, it’s much better to conduct this experiment in France than here — especially if it goes poorly. So, good luck with your socialism, France.
Getting beyond that to an argument made here and by liberals here in America, are producers who flee a country to avoid exorbitant tax rates unpatriotic? Obviously, there’s a fine line involved because every American should be willing to pay taxes to help cover the costs for our common government and the services we all receive. On the other hand, there are limits to patriotism. Just as a slave had no patriotic duty to keep working on a plantation, no American has a patriotic duty to do nothing while the better part of the money he’s earned is looted in order to pay for programs he doesn’t want, need, support, or agree with. So, before we try to tax the rich into oblivion, perhaps we should wait to see what happens in France first.