http://www.zerohedge.com/news/2013-01-06/fairness-doctrine-backfires-after-depardieu-backlash-french-finmin-says-superrich-ta
Submitted by Tyler Durden on 01/06/2013 14:20 -0500
Fairness Doctrine Backfires: After Depardieu Backlash, French FinMin Says Superrich Tax "Plan B" Would Be Temporary
Back in July, when news of what we dubbed the French "Fairness Doctrine" first emerged, i.e., the new socialist government's intent to tax the evil millionaires at a 75% tax rate, we had two observations: i) that "we are rotating our secular long thesis away from Belgian caterers and into tax offshoring advisors, now that nobody in the 1% will pay any taxes ever again" and, somewhat contradicting the above, ii) that "The good news is that with the entire world set to adopt 100%+ taxes on "wealthy" individuals as defined arbitrarily by Ph.Ds, there will be no place to hide." Well, the US promptly followed France into a lite-version of the Fairness Doctrine, which proved us half right, yet one place that has refused to increase its tax rate for the poor or rich, keeping it at the flat 13% for individuals is Russia, which explains why following last week's news that Russia had granted famous French expat millionaire Gerard Depardieu citizenship, the actor best known as Obelix and Rasputin, eagerly rushed to accept his new red passport in Sochi following a bear hug from none other than Vladimir Putin.
And with there being a first fully vetted case study showing that in a world in which not everyone is ready to tax the rich at the same time, the cracks in the French proposal (which in a broke world is inevitable, it is just early: sooner or later a tax on all financial assets everywhere will be imposed, but just not yet) are starting to be visible. Sure enough, minutes ago in a radio interview on France Inter, French Finance Minister Pierre Moscovici said that any measure replacing the 75% income tax (that was deemed unconstitutional by the way) will be "exceptional and temporary", like the original, and not be imposed to "punish those who have succeeded." Just like the Greek ELA program was temporary? Or like the Fed's monetization of Treasurys is exceptional? Or like the immediate response by Depardieu claiming, objectively, that the tax is precisely to punish those who have succeeded?
All those are open questions for the Monsieur FinMin, who also reaffirmed France’s 0.8% growth target for the year (good luck with that), and that temporary nationalization of failed businesses remains a tool for the government to use in only special circumstances, not when the failure is due to isses in the industry (here he is obviously envisioning Peugeot which the government had to bail out recently, as well as the possible nationalization of various Arcelor Mittal assets in the country).
Alas, at this point no self-respecting enterprise will believe a word France's socialist leadership utters, which means that the government will have no choice but to grow (sub-efficient) government jobs on its own, with or without the assistance of the SNB and other various central banks who have been buying French sovereign bonds in recent months.
Finally, confirming that the days of the 75% tax are over is a report in the FT which notes that "France hints at lowering the 75% tax rate", although the trade off is that instead of limiting the surtax to just 2 years, it would be extended for the full 5 years of Hollande's term. Here's to hoping nobody can do simple math in France.
France’s socialist government has hinted that a replacement for its controversial 75 per cent income tax bracket, struck down late last month by the country’s constitutional council, may be at a lower rate but imposed for the rest of its five-year mandate, not just two years as previously proposed.
Jérôme Cahuzac, France’s budget minister, said on Sunday: “I find it a little ridiculous that for tax reasons, this man has gone into exile so far to the east.”
Mr Cahuzac reiterated in a television interview that the government would formulate a replacement for the 75 per cent measure, which was intended to “incite a bit more prudence and decency in a very rare number of leaders”, in order to reduce pay gaps between workers and executives.
He said “part of the parameters” being considered was to run a newly adapted supertax for the rest of Mr Hollande’s term, rather than limit it to two years. But he hinted that the rate would be lower than 75 per cent, pointing out that the constitutional council had indicated that a total tax burden above that level, including other levies, “could be judged as a confiscatory rate” by the council.
There is more good news from the socialists: "He added that the government would not impose any further new taxes after this year. “Tax stability from now is the policy of the government,” he said." What is probably most amusing is that he said the last with a straight face.
And even more good news is that the country which can't afford to spend more cash on social programs will do just that, by "investing" €2 billion into "state-backed job creation schemes in a bid to meet Hollande's bold promise to reverse a trend of fast-rising unemployment by the end of this year."
Well, since the US borrowed the millionaire supertax idea from the French, perhaps France can grab a hint or two from the BLS on how to get its unemployment under control: just hire a few million 60 year old part-time greeters for the local Wal-Mart stores, and watch your unemployment rate collapse to near zero. After all, unlike in the US, France does not have a central bank that is now incentivized to show a weaker employment picture for the coming year...
and since the French model has worked so well , it looks like it will be implemented here in the US....
http://www.france24.com/en/20130105-usa-french-economist-duflo-join-barack-obama-team-policy
France’s Esther Duflo, a world renowned economist, has been nominated by US President Barack Obama to join a government body dedicated to advising the administration on global development policy.
Called the Global Development Council, the group was founded by Obama in 2010 to help shape US development efforts abroad.
While Duflo’s nomination will likely be viewed with a sense of pride in France, it comes as Obama’s leadership continues to be dogged by unflattering comparisons in the media to European-style socialism. Just Friday, the cover of financial news magazine The Economist depicted Obama wearing a beret, red neckerchief and a striped mariner shirt, under a headline that read “America turns European”. The article criticised the country’s recent fiscal-cliff deal as “lousy”, saying its mismanagement bore striking similarities to the “mess in the euro zone”.
Called the Global Development Council, the group was founded by Obama in 2010 to help shape US development efforts abroad.
While Duflo’s nomination will likely be viewed with a sense of pride in France, it comes as Obama’s leadership continues to be dogged by unflattering comparisons in the media to European-style socialism. Just Friday, the cover of financial news magazine The Economist depicted Obama wearing a beret, red neckerchief and a striped mariner shirt, under a headline that read “America turns European”. The article criticised the country’s recent fiscal-cliff deal as “lousy”, saying its mismanagement bore striking similarities to the “mess in the euro zone”.
A rising star
Duflo, who was raised in a “left-leaning Protestant” family, said she became aware of economic divides and social injustice at a very early age.
“I was always conscientious of the gap between my existence and that of the world’s poor,” she told weekly French magazine l’Express in a January, 2011 article. “As a child, I was extremely troubled by the complete randomness of chance that I was born in Paris to an intellectual, middle class family, when I could have just as easily been born in Chad. It’s a question of luck. It inspired in me a sense of responsibility.”
While Duflo may feel that her privilege in life is the result of chance, President Obama’s intention to appoint her to his Global Development Council is not. Ever since completing her undergraduate studies at Paris’s prestigious Ecole Normale Supérieure in 1994, Duflo has led a distinguished career, collecting numerous academic honours and awards along the way.
One of the world’s 100 most influential people
It is by no means an exaggeration to call the now 40 year-old Duflo one of the world’s star economists. French daily Le Monde once awarded her its “Best French Young Economist Prize”, and in 2009, she was granted a MacArthur Fellowship (which has also been dubbed ‘the genius grant’). Duflo’s work also earned her the John Bates Clark medal in 2010, which is considered second only to the Nobel.
The following year, Time magazine named Duflo one of 100 most influential people in the world. The magazine applauded her for relentlessly “questioning conventional wisdom”.
“She has broken out of the ivory tower to do something economists rarely do: gather real data to see what really works in alleviating poverty,” Time wrote.
“I was always conscientious of the gap between my existence and that of the world’s poor,” she told weekly French magazine l’Express in a January, 2011 article. “As a child, I was extremely troubled by the complete randomness of chance that I was born in Paris to an intellectual, middle class family, when I could have just as easily been born in Chad. It’s a question of luck. It inspired in me a sense of responsibility.”
While Duflo may feel that her privilege in life is the result of chance, President Obama’s intention to appoint her to his Global Development Council is not. Ever since completing her undergraduate studies at Paris’s prestigious Ecole Normale Supérieure in 1994, Duflo has led a distinguished career, collecting numerous academic honours and awards along the way.
One of the world’s 100 most influential people
It is by no means an exaggeration to call the now 40 year-old Duflo one of the world’s star economists. French daily Le Monde once awarded her its “Best French Young Economist Prize”, and in 2009, she was granted a MacArthur Fellowship (which has also been dubbed ‘the genius grant’). Duflo’s work also earned her the John Bates Clark medal in 2010, which is considered second only to the Nobel.
The following year, Time magazine named Duflo one of 100 most influential people in the world. The magazine applauded her for relentlessly “questioning conventional wisdom”.
“She has broken out of the ivory tower to do something economists rarely do: gather real data to see what really works in alleviating poverty,” Time wrote.
A closer look at poverty
Duflo’s research has largely focused on microeconomic issues in developing countries and looks at areas such as education, access to finance as well as health and policy evaluation. As co-founder and director of MIT’s Abdul Latif Jameel Poverty Action Lab, Duflo has singled herself out by championing the idea that it is impossible to successfully tackle the issue of poverty without a thorough understanding of the population at hand. In other words, the devil is in the detail.
While Duflo’s work has already helped contribute to changing the way governments and organisations deal with global poverty, her potential new role as a member of the Global Development Council will allow her to have a direct impact on how the US handles such issues.
Duflo’s research has largely focused on microeconomic issues in developing countries and looks at areas such as education, access to finance as well as health and policy evaluation. As co-founder and director of MIT’s Abdul Latif Jameel Poverty Action Lab, Duflo has singled herself out by championing the idea that it is impossible to successfully tackle the issue of poverty without a thorough understanding of the population at hand. In other words, the devil is in the detail.
While Duflo’s work has already helped contribute to changing the way governments and organisations deal with global poverty, her potential new role as a member of the Global Development Council will allow her to have a direct impact on how the US handles such issues.
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