Norquist: France Shifts on Taxes Because 'Taxpayers Are Leaving'

Image: Norquist: France Shifts on Taxes Because 'Taxpayers Are Leaving'

Friday, 03 Jan 2014 07:43 AM

By John Gizzi

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Tax-cutting advocate Grover Norquist is a bit skeptical that France's President Francois Hollande is an economic Saul of Tarsus who has somehow "seen the light," after the French Socialist backed off of seeking a "super tax" on the rich.

"Hollande didn't change his longtime support for higher taxes because he finally understands what is sometimes called supply-side economics and often called common sense," Norquist, president of Americans for Tax Reform, told Newsmax. "He's changing because he sees entrepreneurs leaving France because of its present tax structure. It's that simple."

Norquist added that a day after Hollande's remarks, another vociferous advocate of greater taxes on the highest income earners was sworn in as mayor of New York.

Mayor Bill de Blasio, Norquist said, "is going to learn that it is very easy to move from New York into the suburbs or into neighboring states."

A past general secretary of the French Socialist Party, Hollande became the second Socialist president in the history of France's 5th Republic in 2012 when he unseated conservative President Nicolas Sarkozy.

Having once declared "I don't like rich people very much," Hollande strongly backed a 75 percent tax on the incomes of all who make one million euros a year or more.

But in his televised broadcast to the nation on New Year's Eve, Hollande said that the tax burden on his fellow countrymen was "too heavy, much too heavy." He went on to promise that a review of the French tax system next month would aim to lower taxes.

"We have to spend less to reduce our deficit," said Hollande, "but also to be able, over time, to lower taxes."

"Hollande is changing his tune because people are threatening to leave," Norquist said, recalling how popular French actor Gerard Depardieu made worldwide headlines a year ago by moving to Russia rather than paying the 75 percent income tax.

Moreover, a group of owners of start-up companies who called themselves "the pigeons" — slang for "suckers" — believing they are the "fall guys" for France's economic turmoil, launched a website to protest the near-doubling of the capital-gains tax in Hollande's first budget. The group's website drew a swarm of 34,000 supporters in less than six days.

Eric Ginter, a tax partner in the Paris-based business law firm STC partners, told the Financial Times that of 15 clients he saw in 2012, 10 have left. He explained that "they are leaving not only because of the increased tax burden but because of fiscal uncertainty."

Norquist said that "absent a Berlin Wall that keeps people on one side of it, you can't keep people in one place under a confiscatory tax system. French cuisine, culture, and the delicious croissants can be found in other places: the Francophone countries in Africa; Belgium, which is just next door to France, and Switzerland.

"One could even move to one of the guest rooms in one of [Secretary of State] John Kerry's mansions. He speaks French and would surely provide cuisine and croissants."

Norquist pointed out that the "Polish plumber" — a mythical symbol portrayed by French politicians as someone who would move to France and steal trade jobs by working for less — probably has less interest in going to France than to other countries.

"When you're a Polish plumber and have a skill that's in need, you could go to the United Kingdom and other countries where taxes are lower. The Polish plumber doesn't have to go to France anymore," Norquist said.

Hollande's surprising turnaround on taxes came days after France's highest court upheld the 75 percent "supertax" on high earners. After the constitutional court struck down the original proposal on the grounds that individuals could pay no more than 66 percent as a tax rate, the Hollande government had revised the measure to require companies to levy a tax on the salaries they pay of at least 1 million euros annually.

Two days after Hollande's speech, the value-added tax in France rose from 19.6 percent to 20 percent. The intermediate rate, which covers hotels, restaurants, and public transportation, rose from 7 percent to 10 percent.

"These are part of an overall 12 billion euro hit to households in new taxes this year," reported the Financial Times.

John Gizzi is chief political columnist and White House correspondent for Newsmax.

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