Rich tax forces U.K. millionaires to flee the country; French next?
Back in 2010, our friends in the U.K. hiked its top national tax rate, sending it all the way up to 50 per cent.
Immediately, the rich seemed to panic, choosing to flee the ship rather than go down with it. According to the Telegraph newspaper, since the new tax on the wealthy was brought in, 63 per cent of the U.K.’s millionaires – those with incomes of more than £1 million ($1.6 million) – have left the country.
That’s about 10,000 people, a tax-fleeing bunch that, on the scale of the entire 62 million U.K. population, may not register.
But what, it’s worth asking, may happen in France, when next year the country will institute a top tax rate so savage it still does not seem real?
Come 2013, France will introduce one of the most controversial non-war governmental decisions in recent memory: a rich tax of 75 per cent at the highest level, tops in the world.
The tax, of course, is to help debt-soaked France bring in more national revenue, though perhaps even the most ardent “Occupy Wall Street” backer might concede this is too much.
Under the new tax rate – currently, the top tax rate in France is just 40 per cent – those earning over one million euros ($1.28 million) will be dinged 75 per cent in tax. Paying your share is one thing, but imagine you earn $1.28 million each year and only take home $320,000. How’d you like that?
Like has happened in the U.K., an “exodus” among the wealthiest French appears to be under way.
Already, the rich are stirring. As of last month, 400 million-dollar homes had been put on the market in Paris alone in response to the pending tax boost.
New French president François Hollande has not bristled at the criticism over his planned tax, insisting the increase will help turn his country’s economy around.
Yet the great migration of wealthy French won’t just mean fewer Rolls-Royces and Lamborghinis zipping around the Parisian streets.
After the U.K. raised its top tax rate to 50 per cent, British millionaires left the country, yes, but the nation actually lost money because of it.
The plan was to raise national revenue. Instead, due to fleeing millionaires who took their tax dollars with them, the U.K. has lost $11.1 billion in tax revenue, and was forced to scale back its top tax rate to 45 per cent, beginning next April.
How sustainable will France’s super-rich tax be, then? For a look, perhaps we only need to peak across the English Channel to see.
By Jason Buckland, MSN Money