French Tycoon Prepares for Tax Exodus
by Tom McGregor    Wed, Oct 3, 2012, 09:31 PM
Arnault Bernard.jpgThe French Socialist Government plans to implement an Obama-style soak-the-rich tax scheme that may soon spark a mass exodus of French business people. President Francois Hollande of France intends to impose a 75% millionaire’s tax.

Fox News reports that, “Bernard Arnault – the richest man in Europe – has ignited an uproar in France over taxes, citizenship, patriotism and what policies the government needs to promote growth.”

Mr. Arnault, CEO of LVMH, a French fashion giant, owner of Louis Vutton and Christian Dior brands, stands as the symbol of France’s remarkable luxury fashion sector.

According to Fox News, “so when the face of ‘Made in France’ confirmed Sunday that he had applied for dual citizenship in Belgium it struck deep chord in France’s national pride.”

French President Hollande responded by saying that, “I dislike the rich.”

To read the entire article from Fox News, link here:

This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
Share This Story on Facebook
Comments (10)add comment
...
written by Richard P , October 04, 2012

Don't bank on it, sweetheart. Just another scare the natives story from the Romney gang of France.


...
written by Voice of Rea$on , October 04, 2012

LOL @ Obama style.
I pay 25%.
Everyone should pay 25%.
Fair is fair is fair.
This clown should pay a 90% traitor tax.



...
written by Dom Frankee , October 04, 2012

this story is based on truth but as usual FOX has twisted it! The first craziness is calling this tax "Obama-style" how can 75% taxes be compared to American tax rates which for the rich never tops 15-16% (or 13% if you're Romney)? Secondly, though it is widely assumed that he will not Bernard Arnault has assured he will continue to pay taxes in France, this may be false but still a fact worth mentioning. FINALLY , Francois Hollande did not "respond" that he hated the rich , he was quoted as having said this months ago , in a different context. The truth is I agree with how ridiculous this is but am disgusted with how Fox chose to report it.


...
written by DavidSLesperance , October 04, 2012

Bernard Arnault has now joined Eduardo Saverin as two wealthy individuals who are being vilified by politicians, the media, and the general public for engaging in perfectly legal and logical tax planning. Their sin? Daring to consider leaving their current tax regime. Despite both men having paid tens or hundreds of millions in tax, their decision to sever their future tax liability has given rise to calls of "traitor", "ingrate" and worse.




...
written by DavidSLesperance , October 04, 2012

Unlike Saverin, Arnaud has not "pulled the trigger" and left his current tax jurisdiction. He is simply packing a fiscal parachute, by acquiring a Belgian passport. If he decides to leap out of the French plane, he will have all the necessary elements to properly leave the French tax system. It is important to remember that any American or Frenchman, who decided to exercise their free will and legally sever their tax liability would be liable to pay all applicable taxes (income, capital gains, gift, wealth) right up until the moment that they left. This is also true for anyone leaving the tax jurisdiction of most any OECD country like the UK or Canada.




...
written by DavidSLesperance , October 04, 2012

At the heart of the issue is the attitude of many that these "Golden Geese" are the property of the state and thereby have an obligation to continue to pay the ever increasing tax obligations that politicians place on them. On the other side are the HNW "Golden Geese" who believe that it is their money. While they fully understand that while they remain tax resident in a country they need to pay their full tax liability, they also believe that it is their right to decide to leave that jurisdiction if they wish.




...
written by DavidSLesperance , October 04, 2012

Unfortunately for taxing countries, as a result of globalizing "flattening effects" these Golden Geese are less "sticky" and are not bound to a single geographical location to make and maintain their wealth. They are wealthy and worldly enough to know that while their present location is nice and familiar, there are a large number of countries that would welcome their presence and where they could reproduce their current business and personal lives while greatly reducing their total tax burden. As a result, actions such as those of Arnault and Saverin are dramatically increasing. There is clearly an unprecedented movement of the Golden Geese.




...
written by DavidSLesperance , October 04, 2012

Why is this important? Well, whether you think it is "fair" or "unfair", a progressive tax system as a revenue generating business model was always doomed to produce the present reality of over reliance on a small number of taxpayers for ever increasing percentages of the total personal tax collected. With the top 1% of taxpayers in most progressive countries providing over 30% of the total personal tax revenue, the loss of even a small number of Golden Geese means fiscal devastation to that country and its citizens.

Therefore it is in the public interest to look closely at these "Golden Geese" to see how they can a) retain them as taxpayers: b) attract or create more Golden Geese; and c) get more Golden eggs used to solve domestic and global problems.




...
written by DavidSLesperance , October 04, 2012

There are two approaches that governments can take to fulfil these goals, negative or positive reinforcement. As any psychology student knows, negative reinforcement is not a recipe for long-term success. Requiring unlimited taxes over and above the level of government services you provide to a taxpayer and threatening criminal sanctions to enforce this requirement, will in the short-term produce tax revenue. However, the fact is that it is negative reinforcement. As a result, this approach produces resentment from the taxpayer. Naturally they will take every legal step possible to avoid this negative reinforcement and regain control over what they believe to be "their money". This is simply human nature. This resentment increases when there is a perception by the taxpayer that the additional tax monies are not being used wisely or efficiently. The risk to the country of continual negative reinforcement is that they will upset a Golden Goose sufficiently for that individual to overcome the "life inertia" and move permanently from that jurisdiction. For the country, this means the permanent loss of the Golden Goose and any future golden eggs from that individual.




...
written by DavidSLesperance , October 04, 2012

A better way to successfully fulfil and maintain a country's long-term goals would be engage in positive reinforcement. When trying to convince a Golden Goose to use the "excess" (i.e. taxes over and above government services) to help solve domestic and international difficulties, it is more effective to convince them of the benefits of engaging in strategic philanthropy. Ask a Golden Goose "What do you want people to say at your funeral?". This is why Warren Buffet's "Giving Pledge" (givingpledge.org/) was much better received by the Golden Geese than his "Buffett Rule" call for increased taxation. Many Golden Geese believe that much of their success is due to their ability to solve problems by application of their intelligence, innovation, capital and organizational skills. They believe that they would be be better positioned to oversee the use of this excess than giving it to their government as an inefficient and ineffective charitable vehicle.

Depending on their perceived skills in the area of strategic philanthropy they tend to either i) start their own charity (e.g. Bill Gates) or ii) chose efficient charitable vehicles (e.g. Warren Buffets gift to the Gates Foundation). If the goal is to have the Golden Geese use more of their Golden Eggs to solve societal ills, I would suggest that you will retain, attract, and get more eggs using this approach rather than negative reinforcement.

In applying for Belgian citizenship, Bernard Arnault acted logically and predictably. With a high likelihood that the French tax system would be hitting him harder in the future, he just carried out smart legal self-protection. The French politicians who vilified Arnault and American politicians who slandered Saverin pandered to the emotion of the masses. However they are not acting in the long-term best interest of either of their countries. Some might join Samuel Johnson in saying that "Patriotism is the last refuge of a scoundrel". For those people who reactively say "good riddance" to Arnault and Saverin and other Golden Geese you may want to think about how you are going to replace the over 30% annual tax revenue they provide.




Write comment

busy