Heavy new taxes on les riches are prompting many to think about getting out of France, reports the NYT:
President François Hollande is vowing to impose a 75 percent tax on the portion of anyone’s income above a million euros ($1.24 million) a year. . . .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. . . .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. . . .
At the same time, in spite of brilliant new Socialist policies, the French economy is heading back into recession, says Reuters:
France’s economy is likely to slip into a shallow recession in the third quarter, the Bank of France said on Wednesday, dashing hopes for a robust recovery this year and adding to signs that Europe’s economic prospects are worsening.
To be fair, growth estimates are being ratcheted down all over Europe, from the UK to Greece; France is not in the worst shape.Hollande is going to face some tough choices in the next year. He has predicted economic growth but seems likely to face a recession. This will force him to make more cuts or hike more taxes or some combination of both, and the ratings agencies and the bond markets will be waiting to pounce on his every move.