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August 09, 2012 1:00 PM Will France’s Ultra-Wealthy Go Galt??

By Ryan Cooper

That’s the headline Atrios would have put on this Times piece:

A chill is wafting over France’s business class as Mr. Hollande, the country’s first Socialist president since François Mitterrand in the 1980s, presses a manifesto of patriotism to “pay extra tax to get the country back on its feet again.” The 75 percent tax proposal, which Parliament plans to take up in September, is ostensibly aimed at bolstering French finances as Europe’s long-running debt crisis intensifies.
But because there are relatively few people in France whose income would incur such a tax — an estimated 7,000 to 30,000 in a country of 65 million — the gains might contribute but a small fraction of the 33 billion euros in new revenue the government wants to raise next year to help balance the budget…
Many companies are studying contingency plans to move high-paid executives outside of France, according to consultants, lawyers, accountants and real estate agents — who are highly protective of their clients and decline to identify them by name. They say some executives and wealthy people have already packed up for destinations like Britain, Belgium, Switzerland and the United States, taking their taxable income with them.

Though a 75 percent top marginal rate is devilishly appealing, this seems like about the same thing that dragged down Spain and Italy. Irrational German demands to be “responsible” and cut the deficit leads to budget cuts and tax increases, which causes a recession, making the deficit worse. Rinse and repeat. One might hope that starting that cycle in France might finally break the Germans of their inflation-paranoiac, the-economy-is-like-a-household thinking, but they’ve been stone dense about it so far. Here’s hoping.

I would be interested to see how this plays out if the tax increase goes through as planned. Will the über-rich take their riches and their colossal, bruised egos elsewhere? Or will they take their lumps? Keep your eyes peeled for well-dressed refugees on 5th Avenue.

Follow Ryan on Twitter and his website; follow the magazine @washmonthly.

Ryan Cooper is a National Correspondent at The Week, and a former web editor of the Washington Monthly. Find him on Twitter: @ryanlcooper

Comments

  • c u n d gulag on August 09, 2012 1:51 PM:

    I'm waiting for all of the Galtian Ubermenschen to get together and form their own space exploration movement to colonize the Moon and Mars.
    They may end up running out of countries to move to.

    Because, hey, eventually EVERY country will catch onto the fact that their rich, and the ones that just moved there, are going to want to go somewhere else if their tax rates have to increase enough to keep some reasonable infrastructure in place, and to keep social order.

    May I suggest a name for their Galtian space exploration movement? How about the following:
    "The Uran-anus Project."

  • Josef K on August 09, 2012 1:58 PM:

    They say some executives and wealthy people have already packed up for destinations like Britain, Belgium, Switzerland and the United States, taking their taxable income with them.

    Okay, so what are these latter-day JP Morgans going to do if the Hollande government goes thoroughly populist and nationalizes their abandoned holdings? Do they seriously think the French (given their history) are going to have the least qualms about doing so?

    "Going Galt" only works in Rand's novel because everyone who wasn't in Galt's cabal were portrayed as sub-human apes without a measurable intelligence or initiative. Needless to say, the real world is significantly less simple and far more adaptive. France (not to mention the rest of us) will get along quite fine without these idiots.

  • AmusedOldVet on August 09, 2012 2:26 PM:

    Mr. Cooper,

    Are you saying that government is not like a household? Everyone knows that a household has to balance their budget and governments should do so 100% of the time. After all, no/none/nada/zero/ziltch households ever borrow money to buy new cars or new houses or repair the roofs on their dwellings, so why should the government be allowed to borrow money to fix our infrastructure (roads/water & sewers/bridges/etc.) that is falling apart?

    re c u n d galag...

    I have a number of nominations to take the pioneer flights on the "Uran-Anus Project". The pilot should be a fearless leader like Donald Trump. The navigator should be a person capable of providing direction (and funding) for the bankruptcies of the pilot. Someone like Rupert Murdock. Of course, any trip of this length should have two Kochs for their galley.

  • Mitch on August 09, 2012 2:28 PM:

    I would love to see some rich clowns actually "go Galt" and abandon society.

    They'd be abandoning their sources of income, and would burn through their cash like Mike Tyson. Other people would just pick up the slack, as demand would still be there. Then they would see who needs who more.

    Because, frankly, they need out money more than we need their leadership. LMAO, I can't even type "leadership" with a straight face.

  • Jay C on August 09, 2012 2:34 PM:

    Really: file this under the Department of "Plus a change...": France has been to this dance before - in the 1930's - when any and all attempts by (Leftist) Governments to deal with the effects of the Great Depression by state action were met with a determined policy of capital flight and non-cooperation by those selfsame Moneyed Interests whose descendants are still trying the same-old trick today.

    At least nowadays, M. Hollande doesn't have to worry about Germany imposing its will via armored divisions and blitzkrieg. (They've developed more subtle methods in the interim...)

  • Joe Friday on August 09, 2012 3:20 PM:

    "Though a 75 percent top marginal rate is devilishly appealing, this seems like about the same thing that dragged down Spain and Italy. Irrational German demands to be 'responsible' and cut the deficit leads to budget cuts and tax increases, which causes a recession, making the deficit worse."

    No, no, no.

    Raising taxes on the wealthy has never slowed a national economy.

    Budget cuts, certainly, broad tax increases, certainly, but not raising taxes on the wealthy.

    The wealthy are just not drivers of national economies.

    Not to mention, our most economically prosperous periods in this country were when the top tax bracket was 81%, 87%, and even 94%,

  • TCinLA on August 09, 2012 4:03 PM:

    Get them all in one place and it will be easier to send them to the guillotine, a fate they all deserve since like the Bourbons, they learn nothing.

  • G.Kerby on August 09, 2012 4:50 PM:

    What Joe Friday said !

  • Walker on August 09, 2012 5:02 PM:

    Going Galt only worked in the novel because Galt invented a perpetual motion machine that allowed him to live without those filthy works. Who actually do things.

    In this reality we obey the laws of thermodynamics.

  • Ashbee on August 09, 2012 11:48 PM:

    I actually got my MBA at a grande ecole and France. I can tell you that the elite French went galt a LONG time ago and most of their portfolios are outside the republic.

    Saying that I think you would see acceptance, albeit reluctant, if the marginal tax increase were coupled with a commitment to long term structural reform in France. That's not to say the French need to pull a Jerry but it is to say that if you require the elite to do their part then everyone else needs to do the same.

  • Colin Day on August 10, 2012 2:45 PM:

    But before you can go Galt, you have to be Galt. Are these people really Galt?

  • Sgt. Gym Bunny on August 10, 2012 3:16 PM:

    Wow. Say "taxes" in room full of wealthy folks and they scatter like roaches...

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