If you Tax the Rich in France at Confiscatory Tax Rates they will Leave France

Posted by PITHOCRATES - December 15th, 2012

Week in Review

Rich people won’t leave the country if we raise tax rates.  Governments everywhere say this.  For they will believe that people with the ability to create wealth will just sit idly by while the government takes it away.  So believed the French socialist president.  François Gérard Georges Nicolas Hollande.  Who said he would tax millionaires at 75%.  And by golly he’s going to do it.  But it turns out those who can create wealth are none too keen on paying 75% of everything they earn over a million to the government.  And they’re saying so.  Not so much in words.  But with their feet (see Gerard Depardieu moves to tiny tax haven in Belgium just 800 YARDS from border where a third of people are French citizens dodging Hollande’s high taxes by Ian Sparks posted 12/10/2012 on the Daily Mail).

French film star Gerard Depardieu has moved into his new ‘tax exile’ mansion in Belgium – just 800 yards from the border with France.

The 64-year-old actor’s lavish home in the village of Nechin – on a street known as Millionaire’s Row – is less than two minutes drive from the French town of Roubaix.

Depardieu is the latest wealthy Frenchman fleeing a looming new tax of 75 per cent on all earnings over one million euros – about £850,000…

France’s economy minister Pierre Moscovici hit out this week at repeated warnings in the world’s media that France’s richest people were fleeing overseas.

He told a conference of business leaders in Paris: ‘I am troubled to read in the papers that the exile has begun, and that companies are fleeing…

His comments also came after Laurence Parisot – head of MEDEF, the French equivalent of the UK’s Confederation of British Industry – warned last month that left-wing economic policies risked turning France into ‘the poor man of Europe’.

She said: ‘Large foreign investors are shunning France altogether. It’s becoming really dramatic.

Now before you say the rich are a bunch of evil unpatriotic people who put their greed before the welfare of their nation answer me this.  Did you buy a lotto ticket for that recent half billion dollar jackpot?  If so, why?  Did you want that half billion?  Or did you want to win it so you could give it to the government to help the welfare of the nation?  Don’t answer that for it’s a stupid question.  People buy lotto tickets because they want to be rich.  So they will support raising taxes on the evil rich right up until the day they win a big lotto jackpot and become one of the evil rich.

Let’s look at what winning that jackpot would be like if the U.S. had a top marginal tax rate of 75% for all earnings over a million dollars.  Based on the 2011 tax rates for married filed jointly, and adding the 75% rate to the top of those tax rates, how much of a half billion dollar jackpot do you think you would be able to keep?  After paying your federal income tax of $374,818,212 you’d have only $125,181,789 left.  That’s still a lot of money.  But how many of you would be satisfied with winning $500,000,000 while only being able to keep $125,181,789?  Not many I’m guessing.  Most probably would say that’s not fair.  Which is what people like Gerard Depardieu are saying in France.  And why they are moving to Belgium.

Being a rich, greedy bastard is a sliding scale.  If you earn $35,000 annually anyone earning more who doesn’t vote to increase tax rates on the rich is a rich, greedy bastard.  Should you win a $500 million lotto jackpot the rich, greedy bastard line moves up.  And only applies to people earning more that $500 million.  So you can keep what is yours.

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Crushing Debt is Crushing Europe and the United States

Posted by PITHOCRATES - January 15th, 2011

The Republicans are Irresponsible for not Allowing the Democrats to Spend Irresponsibly

Washington has maxed out their credit card.  They do like to spend.  But now they need to increase their credit line.  And the Republicans aren’t playing nice (see US debt passes $14 trillion, Congress weighs caps by Tom Raum, Associated Press, posted 1/15/2011 on Yahoo! News).

Remarkably, nearly half of today’s national debt was run up in just the past six years. It soared from $7.6 trillion in January 2005 as President George W. Bush began his second term to $10.6 trillion the day Obama was inaugurated and to $14.02 trillion now. The period has seen two major wars and the deepest economic downturn since the 1930s.

With a $1.7 trillion deficit in budget year 2010 alone, and the government on track to spend $1.3 trillion more this year than it takes in, annual budget deficits are adding roughly $4 billion a day to the national debt. Put another way, the government is borrowing 41 cents for every dollar it spends.

In a letter to Congress, Geithner said the current statutory debt ceiling of $14.3 trillion, set just last year, may be reached by the end of March — and hit no later than May 16. He warned that holding it hostage to skirmishes over spending could lead the country to default on its obligations, “an event that has no precedent in American history.”

Such righteous indignation.  According to Mr. Geithner, holding the debt ceiling hostage is just irresponsible.  The Republicans are using the financial wellbeing of the nation for political gain.  But I see it differently.  I don’t see the refusal to raise the debt ceiling as being irresponsible.  I see the runaway spending that makes the debt ceiling an issue as irresponsible.  And, yes, you can blame Bush for adding $3 trillion in 4 years.  If you blame Obama for adding $3.42 trillion in two years.  And then for passing Obamacare which will make us pine for the gold old days when the deficit increased only $3.42 trillion in two years.

Debt-level brinkmanship doesn’t wear a party label.

Here’s what then-Sen. Barack Obama said on the Senate floor in 2006: “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance the government’s reckless fiscal policies.”

It was a blast by the freshman lawmaker against a Bush request to raise the debt limit to $8.96 trillion.

Bush won on a 52-48 party-line vote. Not a single Senate Democrat voted to raise the limit, opposition that’s now complicating White House efforts to rally bipartisan support for a higher ceiling.

Apparently, reckless fiscal policies that explode the debt are only a problem when a Republican is president.  Obama, a tax and spend liberal Democrat, opposed raising the debt ceiling to $8.96 trillion.  Then he outspends George W. Bush and approves a debt ceiling somewhere north of $14.3 trillion.  And to add insult to injury, they bitch with righteous indignation when the Republicans object to their reckless and irresponsible spending.  As if there is no hypocrisy in their actions.

The Debt Dominoes ready to Fall in Europe?

But there is hypocrisy.  Worse, Obama is putting the nation in financial peril.  The debt ceiling is dangerously high.  It’s nearing 100 percent of GDP.  What does that mean?  Well, let’s take a look at Europe.

Greece is drowning in debt.  Even after their bailout, they project her debt to reach 165% of GDP in 2014.  Italy is close behind.  France, Ireland, Belgium and Portugal have debt between 80-99% of GDP.  Britain, Spain, The Netherlands, Germany, Austria and Hungary have debt between 60-79%.

Some of these nations are on the brink of bankruptcy.  Greece had to make ‘austerity’ cuts.  And the people rioted.  France increased the retirement age a couple of years.  And the people rioted.  Britain made students pay more of their own university tuition.  And the people rioted.  They just bailed out Ireland.  Portugal and Belgium have crushing interest costs on their debt.  Spain is of concern.  And Germany, the fiscally responsible nation in the Eurozone, is picking up the tab for a lot of these bailouts.  Not out of altruism.  But a Euro problem anywhere is a Euro problem for Germany.  She doesn’t have much choice.  But how long can she continue to afford this generosity?

Will the Debt Crises be the end of the ‘Cradle-to-the-Grave’ Nanny State?

Not long, it would appear (see Time for Plan B posted 1/13/2011 in The Economist).

This newspaper does not advocate the first rich-country sovereign defaults in half a century lightly. But the logic for taking action sooner rather than later is powerful. First, the only plausible long-term alternative to debt restructuring—permanent fiscal transfer from Europe’s richer core (read Germany)—seems to be a political non-starter. Some of Europe’s politicians favour closer fiscal union, including issuing euro bonds, but they are unlikely to accept budget transfers big enough to underwrite the peripheral economies’ entire debt stock.

Things are so bad with some of these Social Democracies in Europe that the Economist is recommending they just ‘file bankruptcy’ and start anew.  Their financial holes are just too deep.  Of course, this means they’ll probably screw the debt holders.  But there will be fair-shared sacrifice.  They’ll eliminate some of that debt.  But they will also eliminate a lot of that spending that caused their debt crisis in the first place.  Some of their ‘cradle-to-the-grave’ nanny state will go bye-bye.  Considering how ugly it was when France tried to raise their retirement age and when Britain cut back on tuition subsidies, these austerity moves will take ugly to a new level.

But like any problem, the longer you wait to address it the worse it’ll get.

And the longer a restructuring is put off, the more painful it will eventually be, both for any remaining bondholders and for taxpayers in the euro zone’s core. The rescues of Greece and Ireland have increased their overall debts while their private debts fall, so that a growing share will be owed to European governments. That means that the write-downs in any future restructuring will be bigger. By 2015, for instance, Greece could not reduce its debt to a sustainable level even if it wiped out the remaining private bondholders.

And this is our future.  Especially with Obamacare waiting in the wings.

The Road to Serfdom – from Medicare to Obamacare

We shouldn’t be talking about raising our debt ceiling.  We need to be talking about spending cuts.  Geithner, Obama, et al are playing a dangerous game.  They want to grow government at any cost.  To get it so deeply entrenched no matter the cost so that people will riot when faced with austerity cuts.  And they’re coming.  Austerity cuts. 

It’ll start with Medicare doctor reimbursements.  Then when Medicare collapses, Obamacare will add a public option.  This will be the end of private insurance.  Obamacare will then evolve into a national health service.  Which will ration health care services.  Then they’ll raise the Social Security retirement age.  Just like in France.  By then we’ll be well along the Road to Serfdom.

And then the rioting will start.

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