will go back on the tax ceiling (60% of income) if elected
I would say this would be very negative (depending on what income level it takes place) on growth in the economy. we've had discussion on the website over the past about the Laffer curve, and how in general most of us don't believe their is much of a curve unless you get at very high levels of taxation. I think 60% will qualify as high levels of taxation, and raising rates to that level will have a negative effect on economic growth.
can people just move to a lower tax environment in another part of Europe? or is that legally difficult to do?
Marginal tax rate on income (capital and work) is much lower. In France, if you decide to donate up to 6.8% of your income before tax to charities (as I do), your marginal tax rate is 26.8% (you can deduce 66% of your donation capped at 20% of your income, and the marginal tax rate is 40%).
In the same tax law the government introduced a floor, just like the AMT and the "ceiling", but the constitutional council said the floor was too "complicated" so unconstitutional but the ceiling was fine.
Same rule with max replaced by min.
Yes this is totally idiotic (and I was furious), but the then president of said council was a great creator of tax exemption when he was member of parliament, ...
This "ceiling", recently introduced (2006), tends to negate the wealth tax on the wealthiest. People of very high net worth are generally in a position to approximately fix their taxable income level, knowing they will pay 60% of that in tax - they thus set their tax contribution themselves, and avoid most of the wealth tax they'd be liable for. It's widely seen as a tax break for the very rich.
Sarkozy intends to bring the ceiling down to 50% of income. Royal says she will abrogate the whole measure.
And that's just what I know about and I haven't looked actively.
Thanks.
Even without "protected accounts", you have two ways to pay less or zero tax:
(I'm just using google.fr here, I'm not a specialist...)
both have some protected account features, the ones you have mentioned before plus the benefits for smaller sales annually. US has ira's and 401k's that have their biggest benefits (% wise) in the middle class and below--as long as people choose to use them.
I'm under the impression that fewer in France invest in stocks, however. In the US it's well over 50% now. I'm kind of assuming that French pensions are better than US social security, and therefore the French have less reason to invest. Is this your impression as well--on both points?
But if you look at Assurance Vie, 59% of households (22 millions people) have position in Assurance Vie (can be bonds or stocks or whatever - I have some commodities and derivatives in mine).
http://www.cnp.fr/Epargne/Magazine/art_1793.htm
There are about 7.5 millions PEA (plan d'epargne en action) in France, 59% of it is in index/managed fund (OPCVM) and 41% in direct stocks.
http://www.lemoneymag.fr/v4/fiche/s_Fiche_v4/0,5382,13303,00.html
I don't know how many people end up owning stock directly or indirectly in France.
Where did you get the US data from?
I guess in American lingo though, we probably would count that Assurance Vie holding as stock ownership--that is if it's like our ira's and 401k's. In these accounts you have a choice as to how much money to put in, (though there is a maximum), and you have choices as to how to invest the money. Choices may range from almost all choices (for example I own 10 stocks in individual companies and three mutual funds in an IRA), to some company plans where you could be limited to choosing between 5--10 mutual funds. So if Assurance Vie is like that, we would call that direct ownership.
Plus it has the side effect of lowering contribution to social tax based on salaries since wealthy people will now get very low salary.
Welcome to France under a right-wing government :).
