French Follies Continue to Entertain
France is fascinating: a wonderful place to visit, with beauty, style, and culture. But it has a statists welfare economy of an especially paralyzing nature -- and one that keeps playing out in some amusing ways.
Certainly the Socialist government's income tax kerfuffle continues to be worth laughs. After it raised the income tax on the wealthy to 75% (and jacked up other taxes across the board), a number of prominent French fled, including most prominently the iconic actor Gerard Depardieu. After a Gallic brouhaha of prodigious proportion, the French Supreme Court ruled the income tax unconstitutional.
Well, the latest news is that the French government admitted partial defeat. The Socialist French finance minister, Pierre Moscovici, announced that the top rate on earned income would not exceed 60%, following the French Supreme Court's recent ruling. This was no doubt a bitter decision for Socialist Prime Minister Hollande, who in true socialist style planned to spend the estimated 210 million euros the tax would bring in to restore the economy to prosperity. And France's economy is far from prosperous: the unemployment rate has risen every month for the last 19 months and now stands at nearly 11%; the economy hasn't grown appreciably in two years; the government runs at an 85-billion-euro deficit (on total government spending of 300 billion euros); and its citizens' confidence in the economy is at an all-time low.
As if the government could tax and spend itself into prosperity...
But then, Hollande turned around and angered the business community by proposing to raise the payroll tax on executive salaries to -- wait for it! -- 75%! By way of comfort, he added that this increase would be for "only" two years.
Hollande argues that his plan will push -- read, coerce -- companies into lowering compensation for high-level execs, which he holds to be "socially just," considering the high unemployment rate, cutbacks in workers' pay, and weak economy. He tried to put lipstick on this pig of a proposal by saying, "What's my idea? It's not to punish. ... When so much is asked of employees, can those who are the highest-paid not make this effort for two years?"
The idiocy of this is transparent. First, instead of discouraging high pay for the most outstanding executives, Hollande should be celebrating it, in the hope that French companies can attract more of the most talented and intelligent executives. France could surely use a few Steve Jobses, the original of whom actually could create jobs.
Second, Hollande has refused to cut government spending. He wants the brightest and most productive citizens to cut their spending, while he refuses to cut the state's own.
Finally, why would any intelligent executive who sees his payroll taxes rise for two years not suspect that they will remain high forever? When has the state lowered rates, especially under Socialist governments?
Naturally, this comedy is not amusing the French companies, who rightly note that the payroll taxes will not be applied to entertainment figures -- a sort of French equivalent to the "Streisand exemption" (of entertainment stars), enacted by Bill Clinton, to caps on the amount of compensation to executives that companies could count as a business expense. (Clinton was vociferously supported by the detestable Streisand herself.)
Turning this already low comedy into flat-out farce is the revelation that Socialist Jérôme Cahuzac, Hollande's former tax car, has finally confessed to having...a secret bank account!
This is simply too delicious for words. Cahuzac, renowned for his fiery denunciations of tax havens and secret banking, was forced to resign last month when it was revealed that he had engaged in tax fraud. (We might accordingly call him "the Gallic Geithner"!) But he heatedly denied at the time that he held a foreign bank account himself.
However, Cahuzac has now copped to not just having a secret Swiss account, but having a huge one: 600,000 euros, or about $770,000. Worse yet, he had the account for over 20 years! Not bad for a Socialist servant of the people!
How he could tell such a profound prevarication with straight face is still to be explained, though, granted, he was a plastic surgeon before getting into politics.
Then, in a truly touching display of guilt, Cahuzac lamented lachrymosely, "I fought a terrible internal struggle to try and resolve the conflict between the duty to tell the truth, which I failed to uphold, and the desire to honour the missions entrusted in me. ... I was stuck in a spiral of lies and misled myself. I am devastated by remorse."
His wailings lead one to ask: what's French for "spare me, dude"?
Gary Jason is a philosopher, a senior editor of Liberty, and the author of the forthcoming book Philosophic Thoughts: Essays on Logic and Philosophy (Peter Lang publishers).