One in four French University graduates wants to leave the country for a better life. More than 70 percent of the French feel that taxes are “excessive” and 80 percent believe the country’s economic policy is “misguided” and “inefficient.”
This is the new France of Francois Hollande, now the most highly taxed country of the world. Tax revenues will account for an estimated 46.3 percent of GDP this year. (Canada comes in at 32.2 percent, and the United States at just under 27 percent.) The Socialist prime minister has introduced 84 new taxes over the past two years, but this figure leaves out some of the most egregious of his economic activities. His election proposal of a 75 percent tax on incomes above one million euros has been deemed unconstitutional, but don’t worry – French politicians are not letting that ruling get in their way. The measure is still being pushed through the French national assembly, in one form or another.
Some might think this these new taxes might have the beneficial effect of reducing the total public debt burden. After all, some countries seem to take this approach. Norway has famously high taxes but at least runs a public budget surplus in the double digits, unlike the American approach to keeping taxes low but borrowing to keep the game going.
Not quite. Public spending in France is now the highest in the world at 57 percent of GDP. The gap between spending and tax revenues has left the government dependent on borrowing. Predictably this borrowing is not from domestic French citizens, who have almost no money left over to invest after the taxman takes his share. France has over $5 trillion of external debt – that owed to foreigners. That amounts to almost $75,000 per person (50 percent more than in the United States, another notably indebted basket case).
As the French say, plus ça change, plus c’est la même chose. Over 200 hundred years ago Jean-Baptiste Colbert advised the sun King Louis XIV that “The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing.” That sound that we hear now is not Frenchmen “hissing” in disgust, but leaving the country for a better future.