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When It's Time to Give Up On Your CountryBy
Thursday, January 3, 2013
France's leaders are calling actor Gerard Depardieu "unpatriotic" and "pathetic."
You see, Depardieu is leaving France. He's leaving because of the new French tax laws.
French President François Hollande is trying to push through a 75% income tax, plus a higher "wealth" tax, higher capital gains taxes, higher inheritance taxes, and a tax on selling your business, among other taxes.
Depardieu has had enough...
He said he paid 85% of his income in taxes last year. He says he's paid 145 million euros in taxes to France over his career (roughly $190 million).
So he's moving to Belgium to avoid taxes.
France's Prime Minister called this move "pathetic really." He continued: "Paying taxes is an act of patriotism and we're asking the rich to make a special effort here for the country."
At what level is tax no longer an "act of patriotism"? This question doesn't just apply to France... European countries are just a few years ahead of the U.S. in terms of becoming more socialist, with an insatiable demand for more of your income to pay for ever-growing government programs.
Depardieu took offense at being called "pathetic." Based on that, he offered to surrender his French passport. Belgium's finance minister said he welcomes Depardieu and "any other French citizens." And Russia's President Vladimir Putin offered Depardieu citizenship.
Other successful French citizens are leaving, too. For example, the founder of Moet Hennessy Louis Vuitton is also applying for citizenship in Belgium.
Even worse, not only are talented people leaving France, but you can't get talented people into France to work. "We can't bring high-level managers to France," Eric Chaney, an economist at French insurer AXA, told Bloomberg news. "They work in an international market. And the market price for those salaries is well above 1 million euros."
So major French companies are looking to hire senior managers in London or Amsterdam instead of Paris, Chaney explained. France will miss out on all their taxes. By raising tax rates so high, instead of getting more in taxes, France will get no taxes from these guys.
Again, at what level is tax no longer an "act of patriotism?" At what level does it become an "act of confiscation" by the government? And when that point is reached, when is it time to give up on your country?
I don't know what the right level is. It appears that Depardieu has found the level for himself... and that's 85% of his income.
What do you think is the right level? How much of your income should the government be allowed to take? Is Depardieu a traitor? Or is he courageous?
With ever-increasing budget deficits in the U.S., and no real political will (on either side of the aisle) to dramatically cut entitlements, it's a safe bet that higher and higher tax rates are coming in the U.S.
It's time to start thinking about how "patriotic" you want to be.
Good investing,
Steve
Further Reading:
Jeff Clark offered a solution to fix the United States' own income-tax structure. It just involves taking a page from the playbook of one of the most successful companies in the world. In September, Jeff showed Growth Stock Wire readers why this company's "equal-for-all" policies work... and how we can mirror its policies on a national level.
Market NotesA TECH LESSON FROM 2012: YOU BETTER MAKE MORE THAN JUST A "BOX" Last year provided an important lesson for tech investors...
With consumers shifting away from PCs ("boxes") and toward cell phones and tablets, PC makers Dell and Hewlett-Packard were some of the biggest losers of the past year. Meanwhile, software companies have avoided the fallout. Microsoft and Oracle are the two biggest software makers in the world. They don't sell "boxes"... they sell the critical programs that help companies and consumers maximize productivity. Plus, software is a much higher-profit-margin business than hardware.
For investors, it's a huge difference. Millions of companies are happy to pay annual licensing fees to use software made by Microsoft and Oracle. It doesn't matter whose name is on the "box."
As you can see in the chart below, shares of Oracle (NASDAQ: ORCL) and Microsoft (NASDAQ: MSFT) held up well in 2012, despite the ongoing move away from PCs. Meanwhile, Dell (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) both fell more than 30%.
– Larsen Kusick
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