As Margaret Thatcher said, Socialism only works until you run out of other people’s money. Or until the other people flee the country and take their money with them.
The good news is that a lot of mansions are coming on the market in France. The bad news is that their owners are leaving France to someplace where the winters are colder and the tax rates are friendlier.
Several high-profile businessmen have already packed their bags. Former L’Oréal Chief Executive Lindsay Owen-Jones has taken up residence in Lugano, Switzerland. Belgium now counts Amaury de Sèze, who served as chairman of supermarket giant Carrefour, as a local. Nicolas Chanut, founder of French investment advisory firm Exane, moved to London.
Among the controversial proposals in the 2013 draft budget is a 75% tax rate on salaries higher than $1.3 million, up from less than 50% currently. “Wealthy French are not that masochistic,” says Mr. Jottras. The proposed taxes apply only to primary residents of France, however; those who buy a property as a vacation home and spend less than half the year in France will not be affected.
Some aren’t waiting for the new tax laws to pass, blaming their departure on what they call the government’s antibusiness mentality. “Entrepreneurs have the impression that the country doesn’t appreciate them,” says Mr. Boichut. One of his clients with dual French and Italian citizenship is giving up his French passport in disgust, he says.
The vast majority of tax exiles sell their French properties to prove they don’t have French residence anymore, according to real-estate agents. Mr. Owen-Jones of L’Oréal, Mr. de Sèze and Mr. Chanut did not respond to requests for comment.
Oh and more bad news. The new face of the wealthy Frenchman leaving France is younger and hipper.
Today, the new expats are younger and still earning their fortunes, a reflection of the government’s shift toward targeting high salaries instead of household wealth, as well as the greater ease of moving across Europe’s open borders.
France isn’t just banishing its older and wealthier population, it’s getting rid of its most productive population. Which will hit its tax base even harder which will lead to either even higher tax rates or more austerity budgets.
Speaking of that, Obama has got a fever and the only cure for it is Hollande’s tax and spend economic policies.