France discourages Job Creation with a Short Workweek, Confiscatory Tax Rates and Banning Emails after 6 PM

Posted by PITHOCRATES - April 12th, 2014

Week in Review

For socialism to work you need businesses to provide jobs.  Because without people working the government can’t have confiscatory tax rates to fund a massive socialist state.  You’ve got to have jobs.  Which confiscatory tax rates tend to discourage.  For business and rich investors don’t want to pay confiscatory tax rates.  François Hollande ran on a socialist platform in France.  Promising to raise taxes to bring down the deficit.  Which he did.  Raise taxes.  But it didn’t lower an unemployment rate stubbornly staying above 10%.

High taxes and a poor economy caused the socialists to lose elections.  So Hollande is putting together a tax-cutting package.  To reverse their electoral losses.  You’d think the socialists would have learned their lessons that the people want jobs.  And to have jobs you need a business-friendly environment.  Which something like this is not going to help (see France bans work e-mail after 6 p.m. by John Johnson, Newser, posted 4/11/2014 on USA Today).

France already has a 35-hour work week, and a new rule is designed to make sure that it doesn’t start shading toward 40 hours because of work-related e-mail.

The Guardian reports that the rule forbids workers from checking their phones or computers for work stuff after 6 p.m., and it forbids employers from pressuring them to do so.

The move apparently doesn’t affect all workers in France, but it does cover about 1 million workers in the tech industry — including French employees of Google and Facebook…

At Fox Business, a U.S. labor expert finds it hard to believe the IT industry can manage such a draconian shut-off time.

“There’s always something going wrong off the clock — when a computer goes down, it doesn’t go down between 8 a.m. and 5 p.m.”

It’s yet another thing to discourage business.  Things happen after hours.  Can you imagine a business wanting to open themselves to that kind of liability?  Having someone in the company send out an email without checking the clock first?  Or someone working late into the evening to catch up on a project.  Sending out a bunch of emails so people could read them first thing in the morning.  If someone else is working late do they read this email?  Perhaps this person was waiting for this email and would like to address it that evening to reduce his or her workload the following day.  Would this worker have been pressured into reading the email knowing his or her boss would have appreciated the extra effort?

There’s a reason why General Motors (GM) went bankrupt.  Well, there are a few of them.  But one of them was costly workplace rules.  Such as only allowing an electrician to change a light bulb at a work station.  Even if the person at that workstation could have changed that bulb in a couple of minutes.  Instead of waiting an hour or so for skilled trades to come around to unscrew the burnt out lamp and screw in a new lamp.

These little workplace rules add up.  And though seemingly harmless when you look at them one at a time in the aggregate they increase the cost of business.  A lot.  Just ask GM.  Something businesses look at when they are considering the location of a new factory.  Whether to expand production at an existing factory.  Or whether to shut down a factory and move production out of the country to a more business-friendly environment.  Thus killing job creation.  Jobs the socialists need for people to have so they can pay confiscatory taxes on their earnings.

A business unfriendly environment will never lower the unemployment rate.  As the socialists in France have proven.  And left-leaning governments everywhere have proven.  Confiscatory tax rates do not attract businesses.  Or rich investors.  They discourage them.  And encourage them to take their money and invest it elsewhere.  And create jobs elsewhere.  In another country that is a little kinder to business.  And job creation.

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The French boo Socialist François Hollande because of High Taxes and a Bad Economy

Posted by PITHOCRATES - November 16th, 2013

Week in Review

The Founding Fathers gave us a republic because they feared democracy.  Or mob rule.  In a republic you elect responsible people to represent you in government.  In a democracy it’s majority rule of the people.  Often when they are agitated or angered about something.  Which can trample on minority rights.  If the mob is angry over a group of immigrants working for a lower wage the mob can vote a ban on those immigrants.  Round them up.  And send them home.  Or imprison them.  This is the danger of a true democracy.  Anything the majority agrees on can become law.  Which is why the Founding Fathers gave us a republic.  And prayed that only wise men who shared their Enlightenment views would enter government.

Another danger of a true democracy is that once the people understand that they can vote themselves the treasury they will.  While responsible representatives won’t.  Until people start looking at government as a way to get rich.  And become professional politicians.  Instead of the part-time representatives the Founding Fathers envisioned.  Which transformed the republic into a democracy.  Only it’s our representatives that have descended into mob rule.  As professional politicians buy votes by giving the people generous government benefits that the state will soon be unable to afford.  Which is what is happening in France now (see French president booed at WWI ceremony posted 11/11/2013 on the Associated Press).

France’s unpopular president ignored jeers by protesters as he laid flowers at the tomb of the unknown soldier during a ceremony marking the end of World War I…

Shouts of “Hollande resign!” rang out and some demonstrators wore the red caps that have come to symbolize an anti-tax movement that has caused violent protests in Brittany in recent weeks…

Hollande’s popularity has sunk to record lows amid growing dissatisfaction over weak economic growth, high taxes and rising joblessness.

The French people voted the socialist into office because they wanted more free stuff.  Or wanted not to lose the free stuff they already had.  Courtesy of their social democracy.  Which promised cradle-to-the-grave government benefits.  But declining birthrates led to a falling population growth rate all over Europe.  Such that the number of people receiving those government benefits is growing while the number of people paying for those benefits is not.  French president Nicolas Sarkozy tried to be responsible.  While socialist presidential challenger François Hollande (the guy the French now hate) said the problem was that they weren’t taxing the rich enough.  And the other usual socialist claptrap.  Well, the socialist won.  He raised taxes.  The economy tanked as expected.  And now the French people hate him.

This is exactly what the Founding Fathers feared about democracy.  The French republic devolved into mob rule.  And tried to vote themselves the treasury.  Which leads to only higher taxes.  Or cut benefits as the state can no longer afford to pay for these benefits.  Which is where the French are now.  And the Americans will soon be.

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Even the French feel they are Taxed too Much

Posted by PITHOCRATES - September 28th, 2013

Week in Review

President Obama is sick and tired of the Republicans, conservatives and the people who don’t give him everything he wants.   The fiscal year ends Monday so he has to fight with the Republican controlled House of Representatives to get them to pay for his increased spending.  And because he’s spending so much we have to raise the debt limit again so we can borrow the money to pay for his out of control spending.  How he wished the United States was more like France.  They don’t have these problems.  Why, the French will even elect a socialist president.  While President Obama has to veil his contempt for capitalism France can just tax and tax and then tax again.  And no one bitches about high taxes.  Well, that may be changing (see Why do the French tolerate such high taxes? by S.P. posted 9/24/2013 on The Economist).

The government is planning an extra €3 billion ($4 billion) of taxes next year, which will push up the overall tax take in the economy to 46.5% and make 2014 the fifth consecutive year that the tax burden in France has grown. François Hollande, the Socialist president, was elected last year on a promise to tax the rich, with a scheme for a top income-tax rate of 75%. But the tax bill is now wearing holes in the pockets of not just the rich but the rest, too. Why do the French put up with paying so much tax..?

Historically, the French have tolerated high taxes as the price of decent public services and a proper universal safety-net. All those fast trains, first-rate hospitals and public crèches do not come for nothing, and the French are the first to defend a way of life subsidised by the public purse that can often only be bought privately in Britain or America. Moreover, the French make a firm distinction between taxes and social-insurance contributions. Only half of households have to pay income tax, but everybody pays social charges… Indeed, the longstanding tolerance for taxes has underpinned the solidity of French sovereign debt, since it is a fair bet that France’s government can efficiently collect the taxes it needs…

This social contract, however, could be on the verge of breaking down. Over the past year, as taxes on beer and cigarettes have risen, tax-free overtime abolished, tax deductions squeezed and tax-band thresholds frozen, even the French have started to grumble. Polls suggest that tax increases have become the top worry among voters, and chief reason for Mr Hollande’s calamitous popularity ratings. The sharp rise in taxes, which began under Nicolas Sarkozy, the previous president, as part of an effort to reduce the government’s budget deficit, is all the more resented at a time when the French are no longer convinced that their public services—underperforming state schools, overcrowded commuter trains—are so much better than those that cost less in other countries. What is the point of paying Swedish-style taxes (or more) if you do not receive Scandinavian-style public services in return?

The new mood has not passed the politicians by. Mr Moscovici acknowledged recently that the French are “fed up” with taxes. Mr Hollande even conceded in a television interview that tax increases have been “too much”. Most of the effort to reduce the budget deficit in 2014 will now fall not on tax increases but public-spending cuts. Mr Hollande has promised a “tax pause”, which will be part of the message in the 2014 budget.

Yes, even the French are tiring of constantly rising taxes.  Especially when they keep paying more for less.  Which is what happens with socialism.  High taxes are a disincentive.  When you have “decent public services and a proper universal safety-net” it takes away a person’s ambition to do more and achieve more.  They may want to.  But if half of their income from this extra effort goes to taxes why put in any extra effort?  After all, there are already “decent public services and a proper universal safety-net” available.  Why work twice as hard to have virtually the same things?

This is the price of the welfare state.  It makes people less willing to take risks.  To start a business.  To create something new that everyone will want to have.  Socialism kills the entrepreneurial spirit.  And stalls the engine of job creation.  With all those small businesses going uncreated huge amounts of wealth goes uncreated.  Wealth that they can never tax.  Tax revenue doesn’t grow to keep up with the growth in spending.  So they increase tax rates.  And find other ways to make people pay more taxes.  While the quality of services fall.  Just like they are in France.  Just as they are in the United States.

And they will only get worse in the United States with the addition of Obamacare.  Which will explode the deficit while throwing the country back into recession.  With a corresponding fall in tax revenue the government will look for other ways to make people pay more taxes.  It’s happening in France.  As it has happened in every other socialist country.  And will happen in the United States.  Because of President Obama’s veiled contempt of capitalism.  The kind of contempt for capitalism shown by socialist President François Hollande.

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France tried the President Obama Balanced Approach to Deficit Reduction only to see it Fail

Posted by PITHOCRATES - September 1st, 2013

Week in Review

All we heard during the debt ceiling debate and the sequester debate from President Obama is that we must have a balanced approach.  Tax hikes now.  And spending cuts later.  Which, of course, means no spending cuts.  Ever.  For why would they cut spending after they got their tax hikes?  Too many Republicans got snookered by past Democrats on that false promise.

President Obama assures us that if we raise tax rates it will solve all of our problems.  But if we cut spending that’s just stupid.  Because government spending creates economic activity.  According to the Keynesian economics playbook, at least.  And President Obama is a Keynesian.  In fact, he’s so much a Keynesian that some would even call him a socialist.  But Keynesian economics hasn’t worked in America.  It didn’t work in the 1970s.  It gave us a dot-com bubble in the 1990s.  And the beginning of the real estate bubble that burst into the subprime mortgage crisis in the 2000s.  So we’ve tried Keynesian economics and it doesn’t work.  And, as it turns out, Keynesian economics that borders on outright socialism doesn’t work either (see France signals shift to tax cuts in boost to business by AFP posted 9/1/2013 on France 24).

France’s Socialist government is hinting it may appease discontent at tax rises by putting more stress on spending cuts in its fight to control the budget and boost growth…

France has so far relied on tax hikes for about two-thirds of its fiscal adjustment. Most famously it hiked the tax rate to 75 percent on income above 1 million euros.

The reliance on tax hikes has also prompted warnings from the IMF and European Commission that it should focus more on cutting spending in order to avoid snuffing out the recovery…

France’s social welfare system is funded primarily by charges on labour, burdening businesses…

A threat to nationalise a French plant owned by steel giant Arcelor Mittal to protect jobs raised concerns among foreign businesses…

The latest purchasing managers surveys by Markit found that while business activity is picking up in the eurozone overall, it contracted at a faster rate in France this month.

Francois Hollande has been president since May 15, 2012.  That’s about one year and three months.  And in that time his socialist government raised taxes.  But barely cut spending.  Just as President Obama wants to do to reduce the U.S. budget deficit.  Despite the fact that it doesn’t work.  As France has proven.

The U.S. doesn’t have to try the President Obama way.  The balanced approach.  AKA, the all tax and no spending-cut approach.  Because France has tried it in a grand way only to see it fail.  It failed so badly that they’re talking about outright socialism.  Nationalizing industry.  Because the economic climate is so anti-business in France that there is no job creation.  Because there is no business growth.  Worse, the French economy is contracting.  That’s right, while the rest of the Eurozone is seeing growth France’s economy is going deeper into recession.  Because they’re doing what President Obama wants to do in the U.S.

It’s time we purge Keynesian economics from our governments for good.  It is the source of all the great financial problems countries are having all around the world.  All it does is empower those in power.  Elevating them to elite positions.  Where they enjoy a life of plenty and extreme comfort.  While their people struggle to provide for their families.  It’s time that we return to classical economics.  Save our money and live frugally.  Creating private investment capital from our savings via a sound banking system.  Where bankers practice good lending practices without governments passing their risks onto the taxpayers.  Which is what gave us the subprime mortgage crisis.  And the worst recession since the Great Depression.

Finally, governments have to spend less.  So we can cut tax rates.  Providing the spark to ignite private investment.  Which drives business expansion.  And creates jobs.  Which is what people want.  So they can provide for their families.  Not more benefits that the government can’t pay for.  No matter how high the government taxes them.

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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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France is Raising Taxes on Wealthy Individuals and Businesses to Stimulate Economic Activity

Posted by PITHOCRATES - September 30th, 2012

Week in Review

When a store wants to increase sales what do they do?  Raise prices?  Or lower prices?  Well, based on those sales papers, one has to say they lower prices to increase sales.  Because if someone stops buying from a store raising prices just isn’t going to bring them back to that store.  For how many people ever say they would shop more at a store if only they would raise their prices?  Zero people.  For no one ever shops where their money will buy less.

The higher the price of something the less we buy.  Something few people will dispute.  Unless, of course, it’s rich people investing in job-creating businesses.  As government people believe that rich investors will spend more money the less they can make from their investments.  Especially in France (see Hollande opts to punish French rich with €20bn of new taxes by John Lichfield posted 9/29/2012 on The Independent).

France’s Socialist government insisted yesterday that it could solve the conundrum of simultaneous deficit-cutting and growth which has eluded every other European country from Greece to Britain.

As new clouds gathered over the eurozone, President François Hollande pushed ahead with the country’s toughest budget for three decades, taking €20bn (£16bn) of new taxes from big businesses and the wealthy but imposing relatively moderate €10bn cuts on state spending.

With growth stagnant and unemployment rising sharply, the success or failure of the 2013 budget could decide whether Europe’s second-largest economy becomes part of solution to the eurozone crisis or a new, and devastating, part of the problem.

If we can learn anything from history it’s this.  Tax cuts stimulate economic activity.  Tax hikes don’t.  So growth will remain stagnant in France.  And unemployment will rise even further.  Especially when they will tax very successful business people at 75% on earnings and eliminate business tax breaks.

Among other things, the budget introduces Mr Hollande’s “temporary” 75 per cent tax on personal earnings over €1m and abolishes the tax breaks on large firms introduced by his predecessor, Nicolas Sarkozy.

The Prime Minister, Jean-Marc Ayrault, spoke of a “fighting budget” which would help to get France “back on track” after 38 years of successive state deficits. He insisted the target of 0.8 per cent growth next year was realistic and would be achieved.

But opposition politicians said the budget had been “muddled together”, and was more concerned with preserving Mr Hollande’s campaign promises than addressing France’s – and Europe’s – deepening economic crisis. They pointed out that, while almost all European countries were cutting back spending, the French budget for 2013 preserved the 56 per cent of GDP spent by the state and marginally increased the number of state employees, by 6,000…

Critics complained, however, that the budget did nothing to tackle the erosion of France’s international competitiveness, which has been blamed for large-scale redundancies in the car industry and other sectors. The cost of employing a worker in France has increase by 28 per cent in the past decade, compared with an 8 per cent increase in Germany.

A growth rate of 0.8%?  They’ll be able to achieve what many call a recessionary level of growth?  Not much of a goal.  No wonder France has one of the most uncompetitive workforces.  That massive welfare state costs money.  And there’s only one way to get the money to pay for that massive welfare state.  Taxes.  Even if a government runs a deficit they finance with borrowing.  Because they have to pay the interest on that debt with taxes.

Everything comes back to jobs.  The more jobs there are the more tax revenue the government can collect.  But to create more jobs businesses have to grow larger.  But when governments tax businesses (and business investors) so excessively there is little incentive to grow these businesses larger.  So France’s actions are not likely to have any of the intended results.  In fact they will probably only make a bad situation worse.  And may make them part of the problem in the Eurozone crisis.

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Hollande’s Win in France sends a Message to the Wealthy and Job Creators – You are Not Welcomed Here

Posted by PITHOCRATES - May 13th, 2012

Week in Review

The French elections are over.  Hollande is in.  Sarkozy is out.  As are the job creators.  The wealthy.  Who are looking to leave France with their talent and skills.  Because they got the message.  Hollande doesn’t like them.  And he’s coming after their wealth (see France Entrepreneurs Flee From Hollande Wealth Rejection by Anne-Sylvaine Chassany and Jacqueline Simmons posted 5/10/2012 on Bloomberg).

France, the fifth-richest country and home to some of the world’s wealthiest people, including LVMH Moet Hennessy Louis Vuitton SA Chief Executive Officer Bernard Arnault, doesn’t celebrate its affluent. Hollande, a Socialist who once said “I don’t like the rich,” and who plans to slap a 75 percent tax on income of more than 1 million euros ($1.29 million), reinforces the sentiment that in France to be rich is not glorious…

Hollande’s rhetoric against wealth and finance is prompting some in France to consider leaving, and European rivals are welcoming them. “Bienvenue a Londres,” or welcome to London, Mayor Boris Johnson quipped in January. Switzerland and Belgium have been just as warm…

“Seen from abroad, France is the last country where an entrepreneur wants to go,” Marc Simoncini, the founder of French dating site Meetic.com, said in an interview on BFM TV yesterday. “I don’t know of any British person who’s come to set up a business in France. But I know plenty of young French people who’ve gone to London to do that…”

The attitude toward business and wealth creators is driving people away, said Diane Segalen, founder of Segalen & Associes, an executive search firm specializing in top management and board members.

Talent and skills will go where they are welcome, she said…

On the other side of the Channel, Conservative London Mayor Johnson laid out the welcome carpet.

“This is the global capital of finance,” he said. “It’s on your doorstep and if your own president does not want the jobs, the opportunities and the economic growth that you generate, we do.”

Here’s another reason for those who aren’t rich to hate those who are.  Because they won’t just sit there and take it.  These selfish bastards won’t stay in France and continue to use their talent and skill to make great wealth so the state can take it away from them.  You just can’t depend on the rich, can you?  Only those who aren’t rich are caring and decent.  With other people’s money, of course.  For if they won a fortune in a lottery they’d want to pack up their wealth and leave just like everyone else that has wealth.  Because it’s an entirely different picture when it’s YOUR wealth.  Taking wealth from others, why, that’s okay.  But it just isn’t fair to take YOUR wealth.

People need jobs.  And government needs people to have jobs.  So they can pay the taxes that fund their welfare state.  And to create jobs you need people with talent and skills.  To create wealth by investing wealth.  Because that’s the only way you can create jobs.  And tax revenue.  For only someone with a job can pay an income tax.  So it all starts with jobs.  You gotta have them.  And they just don’t spontaneously appear.  If they did France wouldn’t be in the economic mess they’re in requiring a 75% tax rate on millionaires.

This is the future of the welfare state.  High taxation that encourages all those with talent and skill to leave your country.  Leaving only those consuming the benefits of the welfare state.  Without anyone left to pay for it.  Which leads to more government borrowing.  Greater deficits.  Higher debt.  And, well, you can look to Greece to see where it goes from there.

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