Communism it's not, but France's president does a pretty good Marx

President Hollande’s budget takes aim at France’s few remaining wealthy.
President Hollande’s budget takes aim at France’s few remaining wealthy.
Image: AP / Charles Platiau
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When Francois Hollande was elected the 24th President of the Republic earlier this year, France had great expectations. Hollande, the ex-officio co-Prince of Andorra, is world famous in socialist circles. He spent 11 years as the First President of the French Socialist Party. And he’s bullish on taxes.

Today, in an attempt to slash his government’s deficit from 4.5% to 3% by New Year’s Eve, Hollande proclaimed he will tax capital gains, wring revenue by taxing interest and dividends as regular income and, as his piece de la resistance, inaugurate a 75% tax on anyone who makes more than a million euros a year.

These new taxes, known in French as impots and designed to bring in  €500 million, are supposed to be temporary. This is odd. The French system precludes modifying the word impot with temporarie.

Nonetheless, French officials say the Hollande tax is an attempt to reduce yearly expenditures by  €30 billion. It’s an effort to demonstrate that one of Europe’s powerhouse economies —with a public debt hovering around 91% of GDP—can exercise fiscal discipline. This is strange. France has already missed early goals to reduce its deficit to zero by 2017, leaving some analysts to worry that aggressive cost-cutting measures will take a toll on economic growth, which already appears to be slowing.

Socialist Party conventional wisdom, mostly issued in the form of ukase, says the millionaire tax will only affect between 2,000 and 3,000 people. And nine out of ten people won’t be hit by the capital gains and interest taxes. Everybody will want to invest in France. This is curious. French multibillionaire and LVMH luxury goods boss Bernard Arnaud two weeks ago escaped into Belgium. Indeed, so many French people have fled Hollande’s utopia that London, now with some 400,000-and-growing French citizens, is France’s sixth largest city.

Now that’s peculiar. Why would common folks not affected by these new taxes skedaddle across the Channel, particularly as Hollande kept his promise not to dramatically slash spending on social programs, going so far as to slap  €10 billion of tax increases on big companies in 2013?

Perhaps it’s because the left-wing daily Liberation, the Socialist Party percussion section, earlier this month published an op-ed column that advised young people to get out of the country as soon as possible because they had no future in France.

There sure isn’t any work to go around in the French town of Florange, where the Indian steel giant ArcelorMittal on Sept. 27 announced its intention to shut down its blast furnaces, laying off some 550 blue-collar workers, the nine-out-of-ten-ers exempt from Hollande’s new tax schedule.

Hollande is not amused. He sternly told Lakshmi Mittal to immediately invest  €150 million in the site or sell the furnaces. And what if Mittal says non? Liberation reports that Hollande wants his government to buy and operate the facility. Now that’s downright bizarre. Simply Soviet.