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Paris Diary: The Mobility of Capital
France is about to receive a sharp lesson in modern economics. The new Socialist government has raised the top income tax rate to 75%, and the upper rate on capital gains is now 62.2%. My prediction, and I am certainly not alone in making it: the French state will take in less money as a result. Why? Because the government does not recognize that many professionals and senior managers can now do their work anywhere.
In my circle of acquaintances alone, my longtime Paris lawyer will head to Hong Kong before the end of the year; a good friend who is a senior partner at another firm here is relocating to London; the head of marketing at one of the world’s largest luxury purveyors is moving to Italy; and the guy with the Ferrari 458 Italia who rents a parking space near me is off to Belgium. The head of our kids’ school reports that at least a half dozen parents have already signaled to him their intention to move out of the country at Christmas, too. To those figures, we might add all of the highly paid managers who will no longer move here in the first place, and the head offices that will choose another domicile.
Not only will France be deprived of their tax revenues, but all of the money that these folks would have spent on day-to-day living, too.
Of course, most of these people will still do a great deal of work in France. They’ll fly in once a week to see clients or have meetings. But with legal research being done from a terminal, and communications almost free via video-conferencing, living away from Paris is not a hardship, at least from a business point of view. They just won’t pay taxes here.
You can add to the above tax rates the fact that most corporations pay out payroll taxes that add another 50% to their wage bill. And to top things off, when people finally get what’s left of their money, they pay a value added tax on retail purchases on most things of 19.6%, and 5.5% on food and items like children’s clothes.
The old joke in Paris is: everyone works for the government, at least among the people who still live here. The United States would do well not to go down the same road.
Addendum: My own saying about France: Despite the unstinting efforts of the government, this is a wonderful place to live.
August 14, 2013
Breaking: Of Crips and Bloods and Memories of Ghetto Parties
History repeats itself, first as tragedy and then as farce, or sometimes it just repeats itself. From the New York Times on November 30, 1998: At Dartmouth College, white students at a ”ghetto party” dressed…
June 25, 2013
Dean of the College Charlotte Johnson’s War on Students Part (2/2)
Part 1, Part 2 Today’s post again recounts the events that befell the Freshman. However, the content of the Hanover Police department report reproduced in this space yesterday is supplemented by information from my own…
October 18, 2009
When Love Beckoned in 52nd Street
We were at San Francisco’s BIX last evening, enjoying prosecco, cheese, and a bit of music. A full year of inhabitation in Northern California has unraveled to me no decent venue for proper lounging, but…
October 9, 2009
D Afraid of a Little Competish
So our colleague and Dartblog writer Joe Asch informed me that the D has rejected our cunning advertising campaign. Uh-oh. The Dartmouth is widely known as a breeding ground for instant New York Times successes,…
September 4, 2009
How Regents Should Reign
As Dartmouth alumni proceed through the legal hoops necessary to defuse a Board-packing plan—which put in unhappy desuetude an historic 1891 Agreement between alumni and the College guaranteeing a half-democratically-elected Board of Trustees—it strikes one…
August 29, 2009
Election Reform Study Committee
If you are an alum of the College on the Hill, you may have received a number of e-mails of late beseeching your input for a new arm of the College’s Alumni Control Apparatus called…