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France: Is Anybody There? France’s Socialists Generate a New Class of Tax Exiles

Jan. 4, 2013 8:00am

Jean-Philippe Delsol is a tax lawyer, board member of the Institute for Research on Economic and Fiscal Issues in Paris, and contributor to The Center for […]

Jean-Philippe Delsol is a tax lawyer, board member of the Institute for Research on Economic and Fiscal Issues in Paris, and contributor to The Center for Vision & Values at Grove City College.

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The fiscal frenzy that has seized French socialists is not only grinding France’s economy to a halt; it is also attacking the very foundations of French society by destroying entrepreneurship and responsibility. Taxes are raining down on French citizens, and the promised “benefits” often seem to disappear before they have even been introduced. The French government’s 2013 finance bill has announced confiscatory tax rates on incomes and capital gains, and payroll taxes will be increased as well. But the socialists are shooting themselves in the foot, as such tax rates will destroy wealth and drive out entrepreneurs, capital, businesses, and young people. Thus, tax revenues will ultimately not rise but fall.

The message could not be clearer: The number of requests by French citizens to leave France are suddenly up by 400 to 500 percent. As far as my tax law business is concerned, we used to have three to five such cases a year, and we are already facing more than 20 this year. We are witnessing an explosive rise in tax exile since April 2012. On a national scale, the number of tax exiles was previously estimated at some 1,000 per year; today, it is expected to multiply by as much as five. It’s like repealing once more the Edict of Nantes, in the sense that these departures will impoverish French business and industry.

Interestingly, the profile of the people now leaving France has completely changed. We still deal with aging entrepreneurs who would like to sell their business and retire without being soaked by the government. But this number is no longer increasing, in particular since the “Exit Tax” was introduced on capital gains (19 percent, plus another 15.5 percent in payroll taxes).

Currently, however, we are seeing a lot of young entrepreneurs, not necessarily wealthy, but who would like to get wealthy and will not hand over their wealth to the government. The hopeful tax exiles are therefore getting younger: today they are aged between 35 and 50, and not between 55 and 70, as was seen before. The granddad fiscal exodus is over!

More disquieting still, they come from all sectors—mainly from the computer industry and the Internet, as these activities are immaterial and easier to move. But there is a bit of everything. They come from all walks of life: consulting, industry, services. The most recent example from my firm was a client who provided services to senior citizens. He sold his French business and checked out to move it elsewhere. The motives have also changed. These young entrepreneurs are leaving today to develop their business abroad, as French taxation has become unbearable.

In short, French citizens are not leaving simply to enjoy their retirement in the sun. That is why this phenomenon is disastrous and dramatic for our country. They are leaving to create wealth elsewhere—anywhere other than France. Their prime mover is the desire to create without being plundered. Beyond tax reasons, the overall French climate is deleterious for entrepreneurs, which provides further incentive to scurry. Some are fed up with being looted by the government, but most of all they are tired of feeling hated and despised by public opinion and the state.

They do not necessarily choose safe havens such as Switzerland, but rather destinations like Luxembourg, Belgium, the United Kingdom, or even Brazil and Mauritius. These are, of course, tax havens: for instance, payroll taxes in Switzerland, Luxembourg, and the United Kingdom are 20 percent, as compared to 85 percent in France!

Continuing at this pace, France will soon run out of entrepreneurs and wealthy people, and the socialists will have only their taxes to eat.

Editor’s note: A version of this article first appeared at Forbes.com.

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Comments (32)

AmericaMustBeFree
Posted on January 6, 2013 at 7:01pm
This will soon enough be about population reduction… world w

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paulwbrown
Posted on January 5, 2013 at 11:22am
Poor Obama. To be so outdone by the French with their 75% tax; must make the Big O salivate. Well American socialists and Marxists, don’t lose hope. Obama has four years left to destroy our economy, and his rabid supporters will move to ignore the Constitution to keep him in office for life.

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DAH90
Posted on January 5, 2013 at 7:54am
And the Muslims multiply and live off the French gov. as the French flee. Great job, France has lost its nationality.

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- paulwbrown
  Posted on January 5, 2013 at 11:26am
  When one chooses Russia over France because Russia has fair taxes, then you know the end is in sight! What the socialist government of France does not destroy, the Muslims will as they become dominate over France.
  
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nocommie
Posted on January 5, 2013 at 7:53am
Good,run people ,run.Leave the socialist to their own ways and let them support the non essential dead beats…Boycott France.This is what happens when you let Muslims into your country.Muslim country’s haven’t made any progress for over a thousand years.You elected this moron…

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Cryinthewilderness
Posted on January 4, 2013 at 8:12pm
This going to happen in America too but our representatives like, boehner, ryan, McConnell do not see this. We are slaves to the government, people will be leaving soon you watch. Would love to see Donald Trump pull all his money out of America just to make New York hurt.

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Beachmastermax
Posted on January 4, 2013 at 6:40pm
They probably don’t want to live in a Muslim country.

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- AlwaysAmazed
  Posted on January 4, 2013 at 7:44pm
  Muslims don’t even like living in Muslim countries!
  
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turkey13
Posted on January 4, 2013 at 6:36pm
Remember the kid that gave up his US citizenship before Facebook went public and he became a Billionaire. He took all his money and gave the IRS the finger. That 1/2 Billion in taxes he saved bought him his own country. For a small fee he will probably take all the rich Frencmen. What France did was take the incentive from the citizens. At Johnson & Johnson back in the day some machine operators made $10.00 a hour on a base salery of $8.00 a hour and some real hard workers made $14.00 a hour and on the pay stub it was list as incentive!

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GETLIFE
Posted on January 4, 2013 at 6:23pm
Gee… how utterly coincidental and unfortunate that Virgin is closing down its operations in France….
French media is announcing bad management as the cause…. and the unions are in a tizzy….

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- AvengerK
  Posted on January 4, 2013 at 6:42pm
  mon dieu….what a shock..Hollande imposes a 75% tax on “the rich” and they start to leave the country. How totally unexpected. And of course in typical lefty style..the fault lies not with marxist confiscatory policies..but anywhere else.
  
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- Sleazy Hippo
  Posted on January 4, 2013 at 7:00pm
  I am SPARTACUS..
  
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- DADDYWOREAWHITEHAT
  Posted on January 4, 2013 at 10:38pm
  You work? I’ll take your money si vous plait.
  Starting to sound way too familiar right here at home in the USSA.
  
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MisterSarcastic
Posted on January 4, 2013 at 6:17pm
Look on the bright side. They won’t be coming to the US.

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nefer
Posted on January 4, 2013 at 5:28pm
Atlas would appear to be shrugging, just as Ayn Rand predicted.

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- NOTYERHUCKLEBERRY
  Posted on January 4, 2013 at 6:38pm
  Sadly, you are correct. He will be shrugging in more countries very soon.
  
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- NOTAMUSHROOM
  Posted on January 4, 2013 at 6:53pm
  Yup they’re “going Galt!”
  
  Coming to a country near you soon!
  
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ginger100
Posted on January 4, 2013 at 4:59pm
eat the rich until its all gone and then eat the frenchy next to you until there is no one left but govt elites

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- AlwaysAmazed
  Posted on January 4, 2013 at 7:48pm
  …and then eat them!
  
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RestoreCapitalism
Posted on January 4, 2013 at 4:37pm
And yet Obama still follows the same ideology.

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- AvengerK
  Posted on January 4, 2013 at 6:44pm
  It’s like this…lefties believe communism can work, it just hasn’t been implemented properly yet.
  It’s Rocky and Bullwinkle..”this time for sure”.
  
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- AlwaysAmazed
  Posted on January 4, 2013 at 7:52pm
  Well, Obama never was a very bright fellow to begin with…
  
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Flag-Man
Posted on January 4, 2013 at 4:27pm
Liberals (socialist) are really insane

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- hi
  Posted on January 4, 2013 at 4:38pm
  There is no logic to their beliefs.
  
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ROBOBILLIO
Posted on January 4, 2013 at 3:57pm
Maybe, without the ability to sustain the ridiculous social programs through taxing the French, more Muslims will need to be imported.

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sizzlinsexybeckster
Posted on January 4, 2013 at 10:28am
If they leave France where are they going to go? Here?

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- Fubared
  Posted on January 4, 2013 at 3:17pm
  Quebec? Ce la vie.
  
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- Clownzilla
  Posted on January 4, 2013 at 3:25pm
  Well, that French actor ended up moving to Russia. If it’s a good option to move to Russia (and become a Russian citizen) then I say there are many options for a better life outside of France.
  
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- CREENDN
  Posted on January 4, 2013 at 3:35pm
  You may want to read the whole story – “…Luxembourg, Belgium, the United Kingdom, or even Brazil and Mauritius”
  
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- hi
  Posted on January 4, 2013 at 4:43pm
  I know. You were wondering where to go from here, right? Lol!
  Just think if some country adopted our Constitution and just levied one 10% tax on buying goods, and had no social programs,how people from all over the world would flock there and it would become the most prosperous nation in a matter of weeks.
  
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- DADDYWOREAWHITEHAT
  Posted on January 4, 2013 at 10:53pm
  La vie est belle. They don’t care where they go. They worked they made money they will take their money where it will serve them best. On the other hand the takers, they shop as well. Wherever the pickings are good for the takers that is where they will go. We are making the field all about the takers and they are coming here as fast as they can get here. That is the real problem. Immigration law states they must be able to support self but the illegals don’t see it that way. They see a land ripe for the taking.
  
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- paulwbrown
  Posted on January 5, 2013 at 11:30am
  Russia is offering citizenship to Gerard Depardieu who is disgusted with the high French taxes! How ironic that Russia has more favorable taxes than France.
  
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