In 2012, the French socialists hit upon a brilliant scheme. Why not tax rich people 75% on incomes over one million euros a year?
The socialists were positively salivating at the expected revenue increase of billions of euros, dreaming up all the ways they could spend that money.
While the broader 7.2 billion euros 2012 emergency tax package included various business surcharges and wealth taxes that brought in significant revenue, a 75% tax on salaries over one million euros did not bring in the expected revenue of $5 billion.
It raised roughly 260 million euros in its first year and about 160 million euros in its second year, totaling roughly 420 million euros before the government quietly let the temporary measure expire.
Critics and economic analysts pointed out that the tax underperformed because many high-earning individuals restructured their compensation, found legal loopholes, or relocated assets and residency outside of France to avoid the confiscatory rate. Actor Gerard Depardieu simply up and left France.
“I am leaving because you consider success, creativity, talent, anything different are grounds for sanction,” the movie star said, adding, “I don’t expect to be pitied or praised but I reject the word pathetic.”
The socialists considered the tax a great success. It raised more than 400 million euros from people who had too much to begin with. However, the rest of the country chalked it up as a massive failure.
Now, Californians face a "tax the rich" scenario with some differences, but in many ways, it is even more appallingly confiscatory. Proposition 40 would impose a one-time (supposedly) 5% tax on the net worth of Californians worth more than $1 billion.
Does anyone except five-year-olds and liberals believe it will only be imposed "one time"?
Another whopper being told about the tax is that it will raise $100 billion. Many wealthy Californians aren't waiting to find out if Prop 40 passes. They've already left. Prominent venture capitalist Peter Thiel has moved his primary residence to Florida, while others, like Google co-founders Larry Page and Sergey Brin, have also fled for friendlier climes.
According to economic analyses (such as studies by Stanford-affiliated researchers published via the National Bureau of Economic Research), public relocation announcements and private departures by ultra-wealthy residents have already reduced the potential taxable base for Proposition 40 by nearly 30%, with several prominent billionaires accounting for hundreds of billions in displaced wealth.
Yes, but at least the rich who remain will pay their "fair share."
Veronique de Rugy points out what high taxes have done to France.
French people also pay some of the highest taxes in the developed world, and they're not happy with the return. The government already takes more than 52 percent of the country's output in revenue, runs deficits exceeding 5 percent of GDP, and has accumulated debt approaching 120 percent of GDP. Nonetheless, French students complain that the government is shortchanging schools, while everyone sees that it is shortchanging its army and police.
The students aren't wrong to feel left out. At The Two Cents Substack, Hoover Institution scholar Hanno Lustig calculates that, between 1995 and 2024, spending on social protection and health (most of which benefits older people) rose from 53.1 percent to 58.7 percent of all French government spending. The share devoted to education, defense, and public order fell from 15.2 percent to 13.7 percent. Transportation fell from 5.3 percent to 3.8 percent.
It's a "fiscal ratchet," as de Rugy writes. "Once the government projects a spending increase, anything less becomes a cut.," she says. "And once Washington fails to finance the entire projected increase, Californians are told that Sacramento must backfill the missing money." How will the state do that? Get the rich to pay their "fair share" by creating a new tax.
De Rugy asks, "What happens after politicians decide that every spending adjustment can be delayed until tomorrow by finding another pot of private wealth?" France has been engaged in this kind of can-kicking for several generations. Now that the state is actually running out of money to throw at a problem, the people are revolting.
I fully expect the young in America to rise when it becomes clear to even the most match-challenged among them that they aren't getting what their parents and grandparents had (largely because their elders spent it all). I sympathize, but am also afraid of what these nihilists will do.
