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France extreme tax rates

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ss simon
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Post: #1
France extreme tax rates

I heard that the French government says a plan to raise taxes on the wealthy to 75 percent. In my opinion it is good step of government. What do you think about it?

23.03.2013 20:06
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Unkas
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Post: #2
RE: France extreme tax rates

I don't think that a state should need so much money, that he thinks about such a high tax...

25.03.2013 12:06
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Helsworth
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Post: #3
RE: France extreme tax rates

A government with monetary sovereignty doesn't tax people in order to "finance" its expenditure. The goal of taxation is to preserve the power of government, not to finance public expenditure. Government creates fiat by circulating currency with its expenditure, and it destroys it via taxation.
France doesn't have monetary sovereignty, and it's high tax on the wealthy won't solve the country's problem. Europe needs common banks (no greek banks, no german banks, no french banks etc). Europe needs the debt of every member state to be common debt, and it needs a common fiscal and monetary policy, with the aims prescribed by MMT in mind, ergo: full employment and price stability.


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This post was last modified: 25.03.2013 19:03 by Helsworth.

25.03.2013 12:16
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RichardAWilson
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Post: #4
RE: France extreme tax rates

The problem here is that taxing wealth at such a high rate will encourage the French Elite to move their capital abroad in order to avoid the tax. French Capital will be seen flowing eastward to countries such as Poland.

This post was last modified: 25.03.2013 19:00 by RichardAWilson.

25.03.2013 19:00
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BaktoMakhno
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Post: #5
RE: France extreme tax rates

Obviously if you want high taxes you need to ban capital flight - problem solved. Worked for South Korea. Personally however I would favour taxing wealth rather than income.


"The beauty of free trade is that 1 and 1 can be 3" - Titian

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25.03.2013 19:11
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JosephLJ
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Post: #6
RE: France extreme tax rates

If you tax wealthy incomes at 75% and ban capital flight you will very soon see less money/capital come into the country and less economic and job growth because there is no incentive to relocate there when you can go to countries like Poland in the east for the same work. France will find itself in the same situation as Zimbabwe where nobody invested there because they couldn't control their investment and there was no protection of property.

26.03.2013 02:10
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BaktoMakhno
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Post: #7
RE: France extreme tax rates

You misunderstand me. I suggest abolishing all income taxes, instead taxing a percentage of owned wealth rather than annual income. I would have said percentage be moderately progressive, only kicking in for fortunes of millions and ranging between 1/4 to 3/4 of the average rate of return on investments. If ordinary people don't pay taxes, we can kill the taxpayer mentality.

Yes this will result in less private investment from abroad. However it will allow for far more investment by the state, resulting in more investment overall. Free market economies invest a very small fraction of their GDP. If the bulk of tax revenue is invested, economies with high taxes and a large state sector can invest a far higher fraction than is possible for market economies.

Perhaps more importantly, where investment is state directed a country does not end up at the mercy of foreign investors who can dictate policy by threatening to withdraw their investments (see Britain in the late 70's).

NSC 68 (Founding document of US cold war policy) Wrote:
As for capabilities, even granting optimistic Soviet reports of production, the total economic strength of the U.S.S.R. compares with that of the U.S. as roughly one to four. This is reflected not only in gross national product (1949: USSR $65 billion; U.S. $250 billion), but in production of key commodities in 1949...

Assuming the maintenance of present policies, while a large U.S. advantage is likely to remain, the Soviet Union will be steadily reducing the discrepancy between its overall economic strength and that of the U.S. by continuing to devote proportionately more to capital investment than the U.S.


"The beauty of free trade is that 1 and 1 can be 3" - Titian

"There is no conversation more boring than one where Globaltom speaks" - Triniterias

This post was last modified: 26.03.2013 20:21 by BaktoMakhno.

26.03.2013 10:20
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Helsworth
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Post: #8
RE: France extreme tax rates

A country like France, if it had its own national sovereign currency, it wouldn't need foreign investors. Finance is not a problem. Physical constraints are the real cap in what and how much you can do a particular action, or rather follow a particular policy.
France's exports would bring inside the country aggregate demand from abroad. France has manpower, technology, energy, and resources. If it had monetary sovereignty, it could regulate without any sort of problem the behavior of its economy. It could adjust the fiscal deficit to accommodate for the private sector to save, it could create aggregate demand and temper it when conditions require it. It could maintain near 0% interest rates for as long as it wanted.
Fostering autochthonous capital formation is way better than having to make concessions to foreign cartels, multinationals, oligarchs, what have you, and having them come in to exploit the natural resources, focus on cash crops and exports, while repatriating their profits to fiscal paradises, instead of reinvesting it inside the economy, inside communities.
To paraphrase Keynes, the unrestricted/unregulated flow of international capital threatens the self-government system we call democracy.


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26.03.2013 12:02
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Burz
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Post: #9
RE: France extreme tax rates

How dare you! France should be a dictatorship! Then I would move there for sure. I mean, assuming them Catholics weren't too crazy.

This post was last modified: 27.03.2013 16:43 by Burz.

27.03.2013 16:41
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Roger Mexico
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Post: #10
RE: France extreme tax rates

BaktoMakhno Wrote:
You misunderstand me. I suggest abolishing all income taxes, instead taxing a percentage of owned wealth rather than annual income. I would have said percentage be moderately progressive, only kicking in for fortunes of millions and ranging between 1/4 to 3/4 of the average rate of return on investments. If ordinary people don't pay taxes, we can kill the taxpayer mentality.

Yes this will result in less private investment from abroad. However it will allow for far more investment by the state, resulting in more investment overall. Free market economies invest a very small fraction of their GDP. If the bulk of tax revenue is invested, economies with high taxes and a large state sector can invest a far higher fraction than is possible for market economies.

Perhaps more importantly, where investment is state directed a country does not end up at the mercy of foreign investors who can dictate policy by threatening to withdraw their investments (see Britain in the late 70's).

NSC 68 (Founding document of US cold war policy) Wrote:
As for capabilities, even granting optimistic Soviet reports of production, the total economic strength of the U.S.S.R. compares with that of the U.S. as roughly one to four. This is reflected not only in gross national product (1949: USSR $65 billion; U.S. $250 billion), but in production of key commodities in 1949...

Assuming the maintenance of present policies, while a large U.S. advantage is likely to remain, the Soviet Union will be steadily reducing the discrepancy between its overall economic strength and that of the U.S. by continuing to devote proportionately more to capital investment than the U.S.




At the moment I'm basically trying this idea with my game states (raise the capital gains tax while cutting income and excise taxes) on the theory that investment is ultimately demand-driven. If I raise net incomes and lower transaction costs, I should be incentivizing consumption and thus incentivizing investment even though I'm raising the cost of investment. (Plus in theory it discourages the wealthy from sequestering their wealth in savings rather than circulate it.)

It's too early to say if it's working--I'm seeing above average GDP growth in both cases, but that's probably due to starting with very low capital taxes compared to income taxes, so the proportional effects of raising one while lowering the other are nowhere near comparable. My Iran state started with fairly low debt (around 20% of GDP) so I'm inflating the economy through a deficit, while I've mostly been hacking away at my US state's debt by slashing superfluous military spending.

I like the idea of just letting people do their business tax-free and then collecting state funds from whoever ends up holding surplus wealth, but I'm not sure I'm estimating the results accurately (in game or in reality). Seems prudent to complement this approach via fiscal policy with subsidies and such.

Historically the Keynesian system as applied in the US during the 1950's produced huge growth through lots of state spending (largely military) combined with 70-90% taxes on top-bracket incomes, but this was done on the back of a very large export surplus with Europe and Asia. Maybe it requires a degree of protectionism as well. (A relative non-issue then, since WWII bombing decimated European and Japanese industry and China hadn't fully industrialized yet.)

28.03.2013 22:14
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