The higher the tax rate, the greater the length people will go to avoid it. France is a case in point.
An ‘Exodus’ of Wealthy is underway even before French parliament has passed Hollande’s proposed top tax rate of 75%.
The latest estate agency figures have shown large numbers of France’s most well-heeled families selling up and moving to neighbouring countries.
Many are fleeing a proposed new higher tax rate of 75 per cent on all earnings over one million euros. (£780,000)
The previous top tax bracket of 41 per cent on earnings over 72,000 euros is also set to increase to 45 per cent.
Sotheby’s Realty, the estate agent arm of the British auction house, said its French offices sold more than 100 properties over 1.7 million euros between April and June this year – a marked increase on the same period in 2011.
Alexander Kraft, head of Sotheby’s Realty, France, said: “The result of the presidential election has had a real impact on our sales.
“Now a large number of wealthy French families are leaving the country as a direct result of the proposals of the new government.
Gilles Martin, a Swiss tax consultant, reported the same trend. “Since the socialists came to power in France, I have been deluged with inquiries from rich French people who would rather pay their tax in Switzerland,” he told Switzerland’s 20 Minutes newspaper.
A report earlier this year by London estate agents also showed France’s richest people were heading to Britain to escape new higher taxes.
Prime minister David Cameron angered the French last month when he said he would “roll out the red carpet” to wealthy French citizens and firms who wanted move out and pay their taxes in Britain.
“If the French go ahead with a 75 per cent top rate of tax we will roll out the red carpet and welcome more French businesses to Britain and they can pay tax in Britain and pay for our health service and schools and everything else.”
So what’s Hollande to do? Make it a crime to move for purposes of tax avoidance? Tax people for moving?
Mike “Mish” Shedlock
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