24-08-11, 12:56 PM
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France's tax musketeers have done the decent thing
France's tax musketeers have done the decent thing | Agnès Poirier | Comment is free | guardian.co.uk
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Just what we needed, and I'm not being ironic. The day before the announcement of France's austerity budget, 16 prominent French CEOs have called for rich people like themselves to be taxed more. Call them "patriotic millionaires", as they do in the US, or simply responsible citizens, these tax musketeers want to help get France and Europe out of their economic misery. You might say that it is only fair and that those CEOs with stratospheric incomes and bonuses are actually one of the causes of the current financial problem the western world is facing. However, it is always nice when the rich do the decent thing. Parfum de scandal heiress Liliane Bettencourt of L'Oréal is even among the signatories. After being accused of evading taxes, it was high time she proved that France was, indeed, worth it.
There used to be in France, and in Europe at large, what we called "red millionaires": bosses with affiliation to the Communist and Socialist parties. Many had been brought up on Résistance values; it didn't seem then to be a contradiction in terms. As time went by, though, the association unfortunately became odder and odder. In November 1975, Bernard Pivot dedicated one of his famous literary TV shows to the question: "Can entrepreneurs be on the left?" (you can watch it here).
What the 16 French CEOs suggest is that anyone with an income of more than €1m a year (there are 30,000 of them in France) pays an extra tax. This is also what their American counterparts offered to do earlier this year. Warren Buffet and Bill Gates led the charge and wrote to President Obama to offer to help address the nation's deficit. In the US, the Bush administration lowered the two highest tax rates to 33% and 35%. The Obama administration has pushed to raise it slightly to 36% and 39%, but has encountered vicious opposition from the Republicans.
In France, the highest incomes are taxed at 41%. The opposition would like to see a higher rate, at 46%, but so far the Sarkozy government has refused to create an extra level of taxation. Now looking for an extra €20bn to help push down the country's deficit, it looks as if the French government has few alternatives. It is important to remember that the German chancellor, Angela Merkel, as early as 2007, raised the highest income tax rate to 45%. How prescient she was.
Raising taxes seems the most obvious thing to do today for governments in need of fresh money, yet very few resort to it – preferring to create national headaches on how to make savings, as if people needed less public service at a time of economic crisis. The highest incomes must apply – or be made to apply – to the principle of solidarity. After all, they greatly benefited from the last 30 years of global deregulation. Of course, if they volunteer to do it themselves, it's even better.
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Nice gesture and everything, but:
1. There's a big difference between "someone who earns more than 1m" and Liliane Bettencourt.
2. The whole system needs overhauling; this won't fix anything. Thanks to the system by which most people pay most of their tax in "charges" levied on their wages, the poor often wind up paying a way higher proportion of their total income. Earlier in the year I did some Chinese calligraphy workshops for a school in Paris - I made a about 300 euros off it, and IIRC paid about 80 in charges. I am not a millionnaire. For similar reasons no one wants to hire low-skilled employees, because they cost more than they produce.
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