French kick Sarkozy to the curb - Hollande to tax rich at 75%

[Fern]

I hope it happens.

I'm intellectually curious to see it enacted, and if it blows up in his face, perhaps we can put an end to the call for a return to the 95% Eisenhower tax rates.

Yes, I'm very curious as well.

I haven't had time to read any details of his proposals, but I understand his general theme is no austerity and instead stimulus through expanded (or perhaps retained) spending on social programs.

Assuming he can actually carry out such a policy, which I think is certainly doubtful, we will see a nice experiment.

I've noticed people here remarking that the Euro bank and countries like Germany or the UK may prevent him from achieving his policies. True, but let's not forget lenders.

Who will lend to finance any ever increasing debt? If not the ECB (which, if I understand correctly needs approval from Germany and the UK), at what interest rate will they lend? Is it one France can 'afford'?

I would imagine that the PIIGS will be quite angry if they were forced to adopt austerity measures yet France freely gets 'bailouts' from the ECB and rest of Europe.

I.e., I'm expecting political opposition from Europe if his policy is as pro-spending and increases debt as much as advertised.

75% income tax? The details are important but I think it widely acknowledged that that level of taxation promotes deferral, and perhaps shifting, of income. If he is able to enact that level of tax we will see the results.

I've noticed some claiming that corporation can more easily change their residence, but this is not always so. Certainly the easiest to chance residence is the uber wealthy individual. Those who control large amounts of capital.

I would expect that his policy of providing 'bread' for the masses will be popular. However, indications are that it will be unsustainable. France's debt/gdp ratio looks to be about 86%. How far can he raise it and what will happen?

Perhaps we are seeing a Euro revolt of sorts. Greece accepted their 'medicine' (they had little choice). France is apparently refusing. Is this the beginning of the path to France departing the Euro so they can gain control of their currency and devalue their way out of the (likely) inevitable problem of too much debt?

If you're a lender how would you view the increased probability of French Franc devaluation as you consider buying bonds/loaning them money?

By own guess is that the new policies will not nearly be as profligate as progressives want. France is not in near the problem that Greece. They can afford to avoid drastic austerity measures, and that's likely what we'll see: Just less drastic austerity measures.

Fern

 

[ichy]

Oh, well if thats what she told FHM, then it must be true.

Most American millionaires aren't Paris Hilton. They're small business owners who run everything from bowling alleys to port a pot rental outfits to diesel engine repair businesses. The money they have isn't deposited in their laps, it comes from years of hard work, sacrifice and risk taking. How many honest people are you willing to fuck over in order to get back at the Paris Hiltons of the world? Sure you'll always have a few low lifes who get rich off of being famous retards, butt that's the way the world works. Besides, you're not being forced to give her a cent.

 

[fskimospy]

What kind of a fantasy world are you living in? Germany's economy is probably the healthiest in the Eurozone!

I was unaware that the German economy and the Eurozone were even remotely the same thing.

 

[DCal430]

DCal430, Out of curiosity, if that multi billionaire is leaving most of his money to various charities, should the government still take 95% of it, ensuring those charities get nothing? I am specifically referring to Bill Gates.

I say it depends on the Charity. I am not totally against deductions for charitable contributions, but I think their needs to be some limits and more oversight on how the charities spend the money.

 

[jstern01]

What kind of a fantasy world are you living in? Germany's economy is probably the healthiest in the Eurozone!

When the rest have terminal cancer, the one with typhoid looks pretty healthy. Germany debt/GDP is not that far behind France's (around 81.2%). It does Germany no good if most of its trading partners in Europe can not afford their goods. Honestly, it might be better if the EU returned to the pre Euro days, and allow member's currency to fluctuate.

 

[Fern]

Millionaires retiring because it's no longer worth the effort?


HAHAHAHAHAHAHAHAHAHAHAHAHA

*tears*

HAHAHAHAHAHAH

Oh wait - you were serious? Moneymakers aren't going to just stop making money.
-snip-

Yes, "moneymakers" do at some point stop making money. We've seen it before. The UK had income tax rates higher than 100% at one point (back in the late 70's/early 80's IIRC).

IIRC, Elton John had a marginal rate at 103%. Clearly, you do not want to make a profit at that rate. It just costs you money. He and other moved away from the UK. (Non-tax professionals tend to erroneously think you have to actually move away from a country. You don't. You can still keep your homes/mansions etc and you can still spend a lot of time there. Generally, you must merely be there less than 1/2 a yr so you can claim your tax residence elsewhere. For the very wealthy, this is usually no problem. They have the resources to hire the lawyers and buy mansions elsewhere. As importantly, they typically spend a great deal of time outside of the home country anyway as they are on their yachts or jetting around.)

When I worked in Paris for a firm's European HQ we would occasionally do 'residence' studies to advise wealthy people how to change the tax residency status. A common desire is as little disruption to their daily lives as possible. It's not terribly difficult to achieve for the very wealthy.

But importantly, if France adopts a 75% tax rate you're close to a confiscatory tax system. VAT is likely around 20% or so (too lazy to google ATM). Then they have a wealth tax (or did when I worked there) etc. Anybody thinking rich people will accept working for the govt and taking nothing, or next to it, for their trouble and risk is mistaken.

I think the 'powers that be' will accept such a high rate. I also think that economist etc understand the negative consequences to confiscatory rate. They either won't have it, or it will be so full of 'loopholes' to be nonexistent. The latter would serve only the purpose of fooling the masses for political benefit.

Fern

 

[Fern]

-snip-
Greece has actually been undergoing austerity measures for two years, not one. During this time not only has the Greek economy undergone a severe contraction, but Greek debt/GDP ratio has actually increased during this time. So not only are austerity measures contributing to an even worse economy where they are being used, they aren't even accomplishing their goal of a lowered debt/GDP ratio. If that's not failure, I don't know what is.

The US's debt/gdp ratio has increased under Obama. Sounds like you're proclaiming it a failure.

Or, perhaps those advocating austerity think like progressives: Without austerity measures it would have been much worse.

Fern

 

[PingviN]

Actually it is seen as a long-term solution. In bad times it's promoting growth. In good times it's investment. The questions may differ, but the answer stays the same.

I live in a social democracy. When times are good, we're discussing tax cuts as well as increased spending. When times are bad, we discuss increased spending ever since we made major reforms in the mid '90s to reduce the bloated public sector.

mean the whining lazy spendthrifts can't take cutting back on eating out 4 days per week with no job?

Strawman argument.

Austerity means just that: Cutting back. Getting your financial house in order. Working through and paying off the excess debt relative to income. And that take TIME. The solution is not to spend even more money that politicians have no hope of paying for when times are good again. I challenge you to find me any example in history when the debt wracked up by govt Keynsian stimulus spending was actually paid for after growth returned?

We did this back in the early '90s when our estate bubble burst. '90-'94 saw an increase in our debt from 44% to 78%. Austerity measures took place after '94 to early '00, after investments in the IT sector was restored in '93. Bank and financial investment levels stayed put, to no small extent because we bought up about 25% of the banking sector. Tax was increased late '90s and we were back on a surplus.

As of now, public debt is back at 40%.

Financial crisis -> Growth -> Austerity is how we did it.

 

[fskimospy]

We did this back in the early '90s when our estate bubble burst. '90-'94 saw an increase in our debt from 44% to 78%. Austerity measures took place after '94 to early '00, after investments in the IT sector was restored in '93. Bank and financial investment levels stayed put, to no small extent because we bought up about 25% of the banking sector. Tax was increased late '90s and we were back on a surplus.

As of now, public debt is back at 40%.

Financial crisis -> Growth -> Austerity is how we did it.

Not to mention that even within the US you have examples. US debt/GDP ratios declined hugely in the years after WW2, which for economic purposes was a huge Keynesian stimulus package.

 

[fskimospy]

The US's debt/gdp ratio has increased under Obama. Sounds like you're proclaiming it a failure.

I seriously have no idea how you came to that conclusion. Like...that is a total non-sequitur. I have advocated for increased debt under Obama, why would I view debt increasing as a failure? That makes literally no sense.

Obama's policies were to pursue growth using government borrowing. US debt has increased, but US GDP growth has outperformed most other western countries affected by the financial crisis. I view this as a success.

Austerity policies, the likes of which Greece is pursuing has one overriding purpose: the decrease in public debt/GDP ratio. They are implicitly willing to sacrifice growth in the short term in order to deal with this. What I am telling you is that not only has austerity led to enormous unemployment and human suffering, due to huge economic contraction it has failed in its sole objective of reducing the debt/GDP ratio. When a policy causes enormous human suffering while failing to accomplish its only purpose, that policy is a total failure.

Or, perhaps those advocating austerity think like progressives: Without austerity measures it would have been much worse.

Fern

Try and deflect away from the failure of conservative economics in this situation all you want. Obama's stimulus achieved results in line with its purpose. There is no argument that the stimulus increased GDP. Austerity has delivered results contrary to its purpose thus far.

 

[DCal430]

LOL Because taking 95% of someone's worth is perfectly okay as long as it isn't yours, right?

Under my fair tax plan someone who leaves:

1 Million to his surviving family, they would be allowed to keep around 625,000.

10 Million to his surviving family, they would be allowed to keep around 2.3 Million.

1 billion to his surviving family, they would be allowed to keep around 250 million.

2 billion to his surviving family, they would be allowed to keep around 300 million.

10 billion to his surviving family, they would be allowed to keep around 750 million

seems very generous to me. They should be grateful they are allowed to keep anything.

 

[brencat]

seems very generous to me. They should be grateful they are allowed to keep anything.

Right. Because it's not really our money is it. It's only ours as long as our benevolent government says so.

Heil comrade.

 

[Fern]

-snip-
Greece has actually been undergoing austerity measures for two years, not one. During this time not only has the Greek economy undergone a severe contraction, but Greek debt/GDP ratio has actually increased during this time. So not only are austerity measures contributing to an even worse economy where they are being used, they aren't even accomplishing their goal of a lowered debt/GDP ratio. If that's not failure, I don't know what is.

Again:

Under Obama we've gone from a ratio of ratio of about 67% to 86%.

If, by the standard you cite, austerity is a failure so is govt stimulus as done by Obama (actually a Dem Congress since he basically turned it over to Pelosi).

Govt stimulus can help. (But not pork just called stimulus.)

Edit: If Hollande gets his way we'll see what kind of stimulus he pursues.

Fern

 

[fskimospy]

Again:

Under Obama we've gone from a ratio of ratio of about 67% to 86%.

If, by the standard you cite, austerity is a failure so is govt stimulus as done by Obama (actually a Dem Congress since he basically turned it over to Pelosi).

Govt stimulus can help. (But not pork just called stimulus.)

Edit: If Hollande gets his way we'll see what kind of stimulus he pursues.

Fern

I'm not sure what you aren't understanding. I also don't know why you are attempting to apply debt/GDP ratio numbers to stimulus spending, it doesn't make any sense. I will attempt to clarify:

1.) Stimulus programs aim to smooth out economic downturns through debt spending. This will increase debt/GDP ratios in the near term. The goal is to increase GDP, not decrease debt/GDP ratios. (that comes later)

2.) Austerity programs exist for one purpose only: the reduction of debt/GDP ratios, and the sooner the better.

Therefore, an increase in debt/GDP ratios is to be expected with stimulus spending. It would be incredible if it didn't happen. With austerity programs, if debt/GDP ratios are still increasing your program is failing in its only purpose.

European austerity is failing, basically across the board.

 

[senseamp]

So, the European experiment in austerity has resulted in rise of socialism and neo-naziism, yet Republican party is pushing along with cramming austerity down America's throat.

 

[Fern]

So, the European experiment in austerity has resulted in rise of socialism and neo-naziism, yet Republican party is pushing along with cramming austerity down America's throat.

When the Greek measures were announced I said facism etc likely result. And a big part of that motivation is how it was forced upon them by other countries.

France will be interesting to watch (assuming Hollande gets his way).

Fern

 

[werepossum]

Under my fair tax plan someone who leaves:

1 Million to his surviving family, they would be allowed to keep around 625,000.

10 Million to his surviving family, they would be allowed to keep around 2.3 Million.

1 billion to his surviving family, they would be allowed to keep around 250 million.

2 billion to his surviving family, they would be allowed to keep around 300 million.

10 billion to his surviving family, they would be allowed to keep around 750 million

seems very generous to me. They should be grateful they are allowed to keep anything.

Well, dang, that's just mighty white of you. Do they get some slightly used, scabby blankets along with that? Are you going to graciously screw their pre-teen daughters and expect them to be grateful for that too? Is there NOTHING to you but greed?

Jesus wept, the spine of a sea slug and the heart of a bandit. And unfortunately, the brain of a sea slug too, being unable to conceive that people with that kind of money would not stick around for you to rob them and graciously offer them the chance to lick your boot. Worse, people with the potential to earn that kind of money wouldn't stick around, they would earn their money somewhere else and America wouldn't even have the royalties and spending, much less the wealth creation jobs we've already lost.

Even with the UK's Stirling example, you're unable to get a clue. Well, while you're still stuck on the concept that other people are here for your benefit, they are under no such misconception.

 

[Fern]

I'm not sure what you aren't understanding.

It's a matter of what I do understand.

I also don't know why you are attempting to apply debt/GDP ratio numbers to stimulus spending, it doesn't make any sense. I will attempt to clarify:

It makes perfect unless, like you apparently, a person believes debt can be limitless. That increased debt carries no risk at some point. )The risks are increased debt costs, lack of borrowing ability and disruptions to financial systems due to risk of default.)

1.) Stimulus programs aim to smooth out economic downturns through debt spending. This will increase debt/GDP ratios in the near term. The goal is to increase GDP, not decrease debt/GDP ratios. (that comes later)

If you achieve increased GDP, but at the costs of increased debt, and particularly increased gdp/debt ratio, you quite likely have made a poor investment. One pinned upon the mere hopes of a sustained stimulative effect long after the govt money runs out.

2.) Austerity programs exist for one purpose only: the reduction of debt/GDP ratios, and the sooner the better.

Other objectives include avoiding increase in debt/borrowing costs, avoiding loss of borrowing ability, and facing much more drastic austerity measures that would be necessary when the problems of debt costs and lack of borrowing ability arise.

Therefore, an increase in debt/GDP ratios is to be expected with stimulus spending. It would be incredible if it didn't happen. With austerity programs, if debt/GDP ratios are still increasing your program is failing in its only purpose.

European austerity is failing, basically across the board.

Again, it's not it's only purpose.

And you're failing to acknowledge the private sector liquidity problem that excessive govt borrowing leads to; it's sucking up all the capital with none for private businesses. Euro economists acknowledge this problem.

The idea that govt's excessive spending and increase in debt will somehow later be rescued by the private sector's growth in GDP is the greatest expression of confidence in capitalism I've ever seen.

fern

 

[werepossum]

Wait, we have to wait half a decade before recognizing austerity's utter failure? Can I ask how many months it took for you to label Obama's fiscal stimulus plan as a failure? If I remember right you had called it such before it even started. Maybe you still owe him another few years on his plan, eh?

Greece has actually been undergoing austerity measures for two years, not one. During this time not only has the Greek economy undergone a severe contraction, but Greek debt/GDP ratio has actually increased during this time. So not only are austerity measures contributing to an even worse economy where they are being used, they aren't even accomplishing their goal of a lowered debt/GDP ratio. If that's not failure, I don't know what is.

Continued adherence to a failed doctrine and demands to continue it for another three years is sheer lunacy. Admit austerity is failing and we can try to figure out what to do next. Continue to cling to ideology like a life preserver and you'll just watch things get worse.

Greece, like most of PIIGS, is on the kind of austerity program where most people get a government check and you're expected to work maybe forty years out of eighty. Can't imagine why that austerity program hasn't fixed things right up.

 

[Infohawk]

I wonder if some people are seeing the word "Socialist" and thinking this is the same as the USSR. The French Socialists aren't that extreme. On the other hand, in the 80s the last time a Socialist was president of France, they did overspend, there was an IMF bailout of France, and the French Franc was weak until the Euro. I am waiting to see just what changes are really implemented and what the parliamentary situation is.

The Socialists are the big left-wing party in France. I could see this as having as little difference to France as Obama did over McCain. In the end there are bigger underlying factors that are shaping the futures of western countries.

 

[JockoJohnson]

Under my fair tax plan someone who leaves:

1 Million to his surviving family, they would be allowed to keep around 625,000.

10 Million to his surviving family, they would be allowed to keep around 2.3 Million.

1 billion to his surviving family, they would be allowed to keep around 250 million.

2 billion to his surviving family, they would be allowed to keep around 300 million.

10 billion to his surviving family, they would be allowed to keep around 750 million

seems very generous to me. They should be grateful they are allowed to keep anything.

I can't tell if you are serious or if this was sarcasm. If you're serious, there is really something wrong with you. It is their money, not the governments money. You say they should be grateful if they are allowed to keep anything. That is pathetic. If I have money saved for my kids, I would hope to be able to pass it down to them without the greedy fucking gov't taking 85% of it.

 

[nehalem256]

Under my fair tax plan someone who leaves:

1 Million to his surviving family, they would be allowed to keep around 625,000.

10 Million to his surviving family, they would be allowed to keep around 2.3 Million.

1 billion to his surviving family, they would be allowed to keep around 250 million.

2 billion to his surviving family, they would be allowed to keep around 300 million.

10 billion to his surviving family, they would be allowed to keep around 750 million

seems very generous to me. They should be grateful they are allowed to keep anything.

I would say you are far too generous on the higher end. If you cant make it in life with say a 10 million dollar inheritance plus all the other privileges that coming from such a wealthy family brings... you dont deserve any sympathy *smallest violin in the world plays for you*

 

[nehalem256]

I can't tell if you are serious or if this was sarcasm. If you're serious, there is really something wrong with you. It is their money, not the governments money. You say they should be grateful if they are allowed to keep anything. That is pathetic. If I have money saved for my kids, I would hope to be able to pass it down to them without the greedy fucking gov't taking 85% of it.

It is your money. You are free to spend on whatever you want. The inheritance tax keeps money flowing through the economy, and motivates the children of the rich to continue to be productive (these are suppose to be our best and brightest right?).

 

[Phokus]

I can't tell if you are serious or if this was sarcasm. If you're serious, there is really something wrong with you. It is their money, not the governments money. You say they should be grateful if they are allowed to keep anything. That is pathetic. If I have money saved for my kids, I would hope to be able to pass it down to them without the greedy fucking gov't taking 85% of it.

Your thinking is why we have generational aristocracies.

 

[hal2kilo]

Your thinking is why we have generational aristocracies.

Which the founding fathers were adamantly against.

They escaped the lands of the blue bloods.