September 12th, 2012
in Op Ed
by Hilary Barnes
In his successful campaign to become president of France, Francois Hollande (pictured), the socialist candidate, promised to restore justice and fairness to France after the five years under President Nicola Sarkozy, when, self evidently, these qualities were extinguished.
A key measure to this end is to be a 75% rate of income tax on earnings of over €1m ($1.25m) a year in an effort, that many applaud, to put a cap on the absurdly, perhaps obscenely, high earnings paid to top executives in big companies, banksters, and hedge fund owners.
When this measure was first proposed, the nation was immediately swept by speculation that the entire national soccer team would decamp and cease to be available for any further matches, followed closely by hordes of other assorted millionaires and would-be millionaires.
A sigh of relief last week (September 7) when “sources close to the president” as the saying goes, let it be known that “artistes and sports folk” with “high but exceptional” incomes will be excluded from this measure.
Given the deplorable performance in recent years of the national soccer squad, where greed seems to have been a factor behind a noticeable absence of team spirit, not a few French sports fan might think their exclusion from new tax to be less than fair and just.
Be that as it may, others wonder if it is fair and just that fairness and justice in full measure should be applied to “incomes that are high are permanent”, taking in all those who spent their lives building a successful business.
A bombshell fell on September 8 when a vocal opponent of the tax, Bernard Arnault, chief executive of LMVH, the French luxury goods firm and France's richest and the worlds fourth richest man with (according to Forbes) a fortune worth $41bn, announced that he was seeking Belgian nationality (in addition to his French nationality).
Hardly were the words out of his mouth before the secretary of the French Communist Party called him a traitor and a coward and another luminary of the extreme left said that he could move if he wanted, but if he did the government should confiscate his fortune.
When Francois Fillon, prime minister under President Sarkozy, heard the news he delivered this impromptu verdict on the current government:
“When you take stupid decisions you get appalling results.”
The 75% tax proposal is a great way to let the world know that France is a place “where success is not welcomed and which does not like innovators,” he added.
However, Mr Arnault, also said that he will continue to be taxable in France. Curious. Further twists in the tale are to be expected.
Other information the leaked to the press recently suggests the 75% tax measure, after careful consideration, will be substantially watered down.
If this is the case (the government has denied it), the extreme left Jean-Luc Melenchon, who won 11% of the vote in the first round of this year's presidential election as candidate for the Left Front, attributed it to the fact that President Hollande has met leaders of the CAC40, the top echelon of companies listed on the Paris stock exchange, and MEDEF.
The latter is the most influential of France's employers' organisations. The meeting was scandalous in itself, denounced Mr Melenchon, claiming that at MEDEF “ they have cash registers in place of brains," it is “the nation's true general staff.”
The moral of this story, surely, is that social justice is a difficult nut to crack, especially for socialists.
Hilary Barnes is a veteran economics and business writer. He was for 25 years the Copenhagen Correspondent of the Financial Times, Nordic Correspondent of The Economist for part of that time, and published a paper newsletter, sold to international companies in the Nordic countries, called The Scandinavian Economies for over 30 years.