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“Trench Warfare” And “Civil War” Over Confiscatory Taxes In France

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Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

“We’re engaging in trench warfare,” proclaimed Alain Afflelou, head honcho and founder of an eyewear company with 1,200 stores in France and other countries. One of the wealthiest men in France. He was talking about the tax fiasco that split France in two. He was done with his country. He’s moving to London. One of France’s so-called fiscal exiles.

He’d set up his international headquarters in Switzerland, rather than France, 15 years ago to minimize his company’s tax burden, but now he’d personally bail out.

The clamor had started in September when it leaked out that Bernard Arnault, richest man in France and CEO of luxury-goods empires LVMH and Groupe Arnault, was applying for Belgian citizenship. In response, Economy Minister Pierre Moscovici threatened to renegotiate the tax treaties with Belgium, Luxembourg, and Switzerland. A few days ago, reports surfaced in the Belgian media that mailbox companies—a dozen at the Brussels apartment of a Groupe Arnault director alone—have allowed Arnault’s empire to escape several hundred million euros in taxes.

Belgium got cold feet. On Saturday before Christmas when nothing was supposed to happen, Anti-Fraud Secretary of State John Crombez requested that Finance Minister Steven Vanackere transfer Arnault’s tax file to the tax authorities in France, an idea the minister did not immediately reject.

Now Arnault got cold feet. LVMH and Groupe Arnault defended themselves the best they could, claiming that these mailbox companies had “economically perfectly real activities in Belgium where some of them have been implanted for decades.” Indeed, they were “surprised” by the allegations.

But no one stirred up the heat in France like iconic actor Gérard Depardieu who, turns out, set up his domicile in Néchin, a village just across the border in Belgium—as the mayor confirmed, “to escape French taxation.”

Final straw for President Hollande. Now he too threatened to renegotiate the tax treaty “to deal with cases of those who settle in some Belgian village.” He lashed out against the “fiscal dumping” that some countries in the EU were practicing. Prime Minister Jean-Marc Ayrault chimed in; Depardieu’s exile was “pretty pathetic.”

Depardieu was not amused. In an open letter, he renounced his French citizenship, broadsided the Prime Minister and the President, and shocked the nation: all taxes combined ate up 85% of his income.

Not true, explained eyewear mega-retailer Alain Afflelou during the interview. “Those who are in the 75% income-tax bracket may go well beyond 90% taxation.” He listed layers of additional taxes, small percentages here and there that added up. “We therefore have in France a confiscatory taxation that can deprive us of all of our income from work.”

Then he uttered “trench warfare” to describe the battle between the two sides. “We have to stop saying that CEOs are thieves, thugs, and dishonest people. We need people who work, who make a living, who create jobs.”

He was echoing Laurence Parisot, President of the MEDEF, France’s largest employer union. “Doubt is taking over the life force of the country,” she complained; Hollande in his confrontation with Depardieu was doing “the opposite of what he promised,” namely to pacify the country and reduce antagonism. “We are in the process of creating a climate of civil war, similar to 1789,” she said.

Hollande jumped on the airwaves and tried to impose some sort of armistice. The 75% tax bracket would be temporary, he said. And concerning Depardieu: “No citizen must be stigmatized by the President.” But by using that word, he stigmatized him—and all the others who’re trying to escape.

There are a lot of them. Le Figaro cited tax lawyers who spoke of “unprecedented waves” of fiscal exiles who were leaving France, some of them in the middle of the school year, which “had never happened before.” Moving companies confirmed it. Outflows “remain two to three times higher than normal,” said the boss of one of them. “Our trucks leave constantly in direction of Switzerland, Belgium, and Great Britain.”

And the profile of the fiscal exiles has changed. They’re no longer rich heirs or fifty-year-olds who’d sold their companies, but “young childless entrepreneurs” who wanted “to settle in another country to start up their companies,” according to one of the tax lawyers. And top executives between 40 and 55 were moving with their kids to Brussels or London “to escape” the new taxes.

Entire skill sets were leaving. International companies were “progressively relocating part of their teams abroad,” said le Figaro’s source within the MEDEF. Among them more and more secondary functions, such as human resources or finance—”much less visible and symbolic than relocating headquarters.”

With heavy consequences for the economy. When talent, entrepreneurial energy, capital, and profits leave the country all at the same time, it’s hard to imagine how economic growth and job creation could miraculously reappear.

Also on Friday before Christmas when nobody was supposed to pay attention, the European Commission issued a mind-boggling report on bank bailouts in the EU: Member States had committed over $2 trillion at the expense of current and future taxpayers to bail out stockholders, bondholders, and speculators. Read.... The EU Bailout Oligarchy Issues A Report About Itself.

 

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Mon, 12/24/2012 - 14:39 | 3093376 etresoi
etresoi's picture

you have the right to remain a debt serf to an insolvent, immoral, unethical country.

Mon, 12/24/2012 - 09:56 | 3092609 albanian
albanian's picture

+100%

Mon, 12/24/2012 - 08:18 | 3092506 etresoi
etresoi's picture

Explain please.

All of my asset are physical, which have been increasing in value by 11% per year for the past 12 years.  3% covers my living expenses.

Mon, 12/24/2012 - 13:19 | 3093169 etresoi
etresoi's picture

Gold has increased on average 11 percent per annum over the past 10 years.  I need 3 percent for living expenses.  Paper assets are a fool's game

Mon, 12/24/2012 - 09:42 | 3092580 robobbob
robobbob's picture

A core component of the move toward global government is global taxation.

In your quest to stay ahead of the redistributors, you may eventually find yourself the richest man on a deserted, barren, wind swept, rocky outcropping near the artic circle.

good luck to you sir

Mon, 12/24/2012 - 14:40 | 3093384 etresoi
etresoi's picture

Thank you but I do not expect to live so long.

Mon, 12/24/2012 - 11:17 | 3092794 agent default
agent default's picture

You assume that it will happen.  Nobody has ever managed to rule the world.  And when I look  at the pathetic assclowns we call leadership, I can tell you it is a dead end project.

Mon, 12/24/2012 - 09:20 | 3092559 urwright
urwright's picture

one day - maybe not in your life - the very idea that just cause you have a chunk of money/metal/guns you get a little more of those for free at the cost of all - WILL BE RECOGNIZED AS CRIMES AGAINST CAPITAL - and justice will come via capital punishment   did that clear it up for ya?

Mon, 12/24/2012 - 14:41 | 3093386 etresoi
etresoi's picture

so says the total asswipe.

Mon, 12/24/2012 - 13:21 | 3093177 etresoi
etresoi's picture

Follow your path; I will follow mine.

Mon, 12/24/2012 - 09:11 | 3092548 negative rates
negative rates's picture

Okay, so when the time police show up and leave you with nothing but the cloths on your back, and  the bullion in your pocket, just how far can you walk with your load of physcial to the nearest safety zone? That is to say if you actually live through the trama of such an event. It is written to occur at a time in which you will not be prepared for, a time like right now!

Mon, 12/24/2012 - 13:22 | 3093179 etresoi
etresoi's picture

negative mind, good luck

Mon, 12/24/2012 - 03:38 | 3092417 AnAnonymous
AnAnonymous's picture

“We are in the process of creating a climate of civil war, similar to 1789,”
______________________________________

Similarities?

In the 1750s, the colonies were burgeoning middle class's dominions, which swayed out of the King's authority.

The french burgeoning middle class pressured the King into supporting the 'american' revolution.

The french burgeoning middle class were deep in support to the 'american' revolution in hope they would return the favour by meeting their business promises.

End of the 'american' revolution, US Americans not only renegated on all their business promises toward the french burgeoning middle class, they also refused to pay their debt to them and best, they confiscated most material the French sent to them (like the navy that was something like 70 ships big)
A state of quasi war between France and the US quickly followed by the way.

That left the French country broken with a burgeoning middle class at the gates.

So yep, where are the similarities with today?

Mon, 12/24/2012 - 07:32 | 3092487 negative rates
negative rates's picture

Really? Why then did we give napolean some $12 million in 1803, so he could ravage Europe?? The Dutch and England bought those bonds creating the beginning of our debt cycle. Which our middle class is still paying towards in the form of an bloated currency and price inflation. That might be a similarity.

Mon, 12/24/2012 - 11:39 | 3092863 AnAnonymous
AnAnonymous's picture

Really? Why then did we give napolean some $12 million in 1803, so he could ravage Europe??

_____________

Well, actually,in 1803, US americans promised some money to buy Louisiana and the people on it.

You know, the 'american' style, once a flesh trader, always a flesh trader...

Best, up to today, the sum to buy Louisiana and the people on it has never been paid in full!

'American' nature is eternal.

Just as the same today as it was in the good ole days.

'Americans' would like to sell the idea of degeneration, a change, a corruption that would require correction, cleansing etc

Fact is that this is an 'american' world, 'americanism' rules supreme and 'american' nature expresses itself just as it expressed itself in 1803.

No change. No corruption. No degeneration.

Only 'americanism' in its mighty prime.

Mon, 12/24/2012 - 12:59 | 3093105 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous rewrites history yet again:

Best, up to today, the sum to buy Louisiana and the people on it has never been paid in full!

Another unsupported assertion. Do you can back it? It sounds like being from somekind of fantasy you learned after climbing the crazy beanstalk to tralalala land of Chinese citizenism.

Typical the case you again, swinging a sponge on the end of a string, creating imaginary fabled past from your visions of stupor as seen in the haze of the narcotic smoke downthere. Posting elaborate nothingness through Peoples Liberation Opium Parlour wifi hotspottings is the limitating factor, the constrainment of mettle or something. Once again, it does not correspond with reality.

Chinese citizenism has had this song called avoidance of self indiction. You are somehow singing much on display plentifully.

Mon, 12/24/2012 - 09:49 | 3092585 falak pema
falak pema's picture

Aren't you bending history a bit. "We" being the USA paid France/Nappy 12 million for the Louisiana purchase. Thanks to that Jefferson's presidency added a HUGE swathe of virgin land to the original 13 states...

It had nothing to do with financing Europe. "We" in those days were a pygmy nation of newly liberated colonies, fragile as hell, and all thanks to French/Anglo rivalry and some french "universal value" dreams iconised by Lafayette.

Louisiana Purchase - Wikipedia, the free encyclopedia

The Louisiana Purchase was by far the largest territorial gain in U.S. history, stretching from the Mississippi River to the Rocky Mountains. The purchase doubled the size of the United States. 

Aren't you suffering from US delusions of grandeur now retroactive to 1803 age history? 

Jefferson's least problems were what Bony would do in Europe, keeping in mind Bony was not Emperor then and had no delusions of conquering all of Europe, just England; traditional enemy since 7 years war days/Aboukir disaster and main competitor in global colonialisation race. 


Mon, 12/24/2012 - 14:44 | 3093396 etresoi
etresoi's picture

Fakak, most amerikans are functionally illiterate and ignorannt of thier country's histiry.

Mon, 12/24/2012 - 05:12 | 3092440 samcontrol
samcontrol's picture

I am now a fan, you know your history buddy.

Mon, 12/24/2012 - 06:39 | 3092461 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

I am now a fan, you know your history buddy.

Made me laugh.

Clearly, European Chinese citizenism citizens are after the project "Blobbing up in Europe".

This crisis has confirmed this region of the world on that path and Chinese citizenism citizens would be stupid to let this opportunity ruin.

As Chinese citizenism citizens advocate bigger than biggest is still not enough, they even managed to get much more than blobbing up.

Something kept under the rug but that is bigger than biggest when one considers all Chinese citizenism mantra.

The Chinese citizenism citizens would be dumb not to keep the fearmongering up as they have obtained so much from it already.

Awesome recipe.

Mon, 12/24/2012 - 03:14 | 3092407 dlmaniac
dlmaniac's picture

And freegold folks tell us Euro is the solution to our Dollar crisis. LOL. Who wants to be a part of this communism nonsense? Raise your hand.

Mon, 12/24/2012 - 03:14 | 3092406 AnAnonymous
AnAnonymous's picture

Hopefully, one of these 'americans' guys had the great idea of move to Belgium.

So it helps the illusion.

Funny how many of this talent, entrepreneurial energy, capital, and profits move to Germany which is the power engine of the EMU zone.

Instead, they prefer to relocate to London, which hosts the City. They prefer to move to Britain whose debt burden has proven this country is bullet proof to collapse under the weight of the debt.

They are all fleeing the EMU zone.

Debt. When you do not want to pay on it, you have to move to a place that proves day in day out its capacity to go deeper and deeper into debt.
Move away from places that is into fastening the belt. It is bad mojo.

Move to places that can live on the credit cards.

Mon, 12/24/2012 - 02:56 | 3092398 LaughingRebel
LaughingRebel's picture

If at first you don't secede; try, try again

Mon, 12/24/2012 - 01:47 | 3092373 are we there yet
are we there yet's picture

EU politicians and bankers are not brilliant visionaries, they are crazy as a bag of cats rolling down a hill. An Alzheimer's ward could lead France better.

Mon, 12/24/2012 - 10:01 | 3092615 falak pema
falak pema's picture

you mean Ben and Jerry Obammy?

Mon, 12/24/2012 - 00:14 | 3092281 Nimby
Nimby's picture

Qui est Jean Galt?

Sun, 12/23/2012 - 23:09 | 3092222 Eally Ucked
Eally Ucked's picture

Paying 90% tax and being at the same time the richest guy there? Something fishy about that 90% or .... anyway thy're f....

Sun, 12/23/2012 - 23:14 | 3092228 Eally Ucked
Eally Ucked's picture

I know now, he pays 90% of taxes his secretary has to pay.

Mon, 12/24/2012 - 00:50 | 3092330 sun tzu
sun tzu's picture

At least he's not a leeching obama ape

Mon, 12/24/2012 - 10:57 | 3092741 Eally Ucked
Eally Ucked's picture

Do you mean by that that he's not like Dimon, Ben Mosche, Buffet and few mln of similar to them or you talk about seniors or even SNAP card recipients? A bit of clarity would be useful. 

Mon, 12/24/2012 - 13:11 | 3093139 hootowl
hootowl's picture

All of the above-mentioned.....including all parasitic apes!............... enough clarity?

Sun, 12/23/2012 - 23:03 | 3092219 gann1212
gann1212's picture

test

Sun, 12/23/2012 - 22:58 | 3092214 Rustysilver
Rustysilver's picture

EU will just harmonize the individual as well as corporate rate across 27 EU countries.  They are probably working on it as well speak.

Besides, when was the last time that anybody respected Belgium's neutrality.

Sun, 12/23/2012 - 22:36 | 3092178 dunce
dunce's picture

Some attribute the long economic malaise in Spain after they expelled all the Jews from their country to the best minds leaving with the locals not knowing international commerce, contacts, or arrangments. so it would seem laws can separate the wheat from the chaff easier than wealth from the people who create it.

Mon, 12/24/2012 - 12:51 | 3093074 sun tzu
sun tzu's picture

Yes, the Spanish need a Ben Bernanke and Lloyd Blankfein to have a stable and strong economy. We'll send them over on the next flight.

Mon, 12/24/2012 - 04:05 | 3092430 knukles
knukles's picture

C. Columbus, to wit.

Sun, 12/23/2012 - 22:27 | 3092160 andrewp111
andrewp111's picture

France created the EU and still controls it. The EU will have to impose Federal taxes on EU citizens, and will have to pursue those who leave just like the USA does. (If you renounce your US Citizenship, you still owe tax to the IRS for 10 years in addition to any exit taxes you must pay when you leave.)

Sun, 12/23/2012 - 23:09 | 3092224 sun tzu
sun tzu's picture

They will simply leave the EU and settle in Asia, the Bahamas or South America. Some will simply shrug. I for one would not work if anyone took 90% of my earnings. I'd rather go on welfare and help crash the welfare state

Mon, 12/24/2012 - 10:24 | 3092653 rwe2late
rwe2late's picture

Work? Earnings?

The generalities, the emotion-laden terminology, the language of the establishment (conveniently for some?) only conflates and confuses.

maybe we need to be more specific, with more exact terminolgy.

Are we talking about the multi-million salary of a sports star?

Are we talking about the wages of a store clerk?

Are we talking about stock dividend "earnings"?

Are we talking about cost-plus profits from your no-bid government weapons contract?

Are we talking about profits from your insider public land-use grant from the government?

Are we talking about your company's protected pharmaceutical patent-copyright royalties?

Your inheritance? Your gambling winnings? Your insider derivative speculations? Your military-backed and bribery managed foreign "investments"?

Are all income sources the same? Are they all "wages" from "your work"?

The scam goes deep, into the language, until you can hardly find words to separate the thieves from the victims.

Mon, 12/24/2012 - 12:57 | 3093093 sun tzu
sun tzu's picture

Does it matter what type of income? If I risk $100 of my money which was earnings from work to make $100 whether from a poker table or the stock market, why should the government take $90 and leave me $10? Will the government cover 90% of my losses if the bet or investment goes bad?

Attacking strawmen does not bolster your case. Just because some corporations and industries have it easy, why should the rest of use be made to suffer? That is the socialist/fascist way of government. Because Jon Corzine stole $4 billion, the SEC will now tax each of your transactions on the market instead of having Corzine put into prison. Because Bush and Obama gave companies no-bid contracts, the government now has to raise taxes. Instead of punishing the criminals and stopping the scams, let's penalize everyone with higher taxes and a police state.

Mon, 12/24/2012 - 16:34 | 3093622 rwe2late
rwe2late's picture

 The contention that the aristocracy has the "right" to take whatever they wish from the peasants,

because the aristocracy claims ownership of the land the peasants must work,

should no longer convince anyone, though apparently it does.

No, all income is NOT the same.

Nor should anyone be dazzled by the fact that the aristocracy maintains all their wealth and income is inviolable because they have also conveniently defined what is legal.

Sun, 12/23/2012 - 22:02 | 3092114 q99x2
q99x2's picture

I believe it's going to get physical with all that money and power getting pissed. The banksters and hedge funds are going after anyone with money.

Sun, 12/23/2012 - 22:04 | 3092116 Bullwinkle Moose
Bullwinkle Moose's picture

There is no simpler way to accomplish this than to bleed them with taxes.

Sun, 12/23/2012 - 22:11 | 3092103 Bullwinkle Moose
Bullwinkle Moose's picture

That's just what socialism gives: more of nothing to everybody. But then again, most people can't face the truth. They will, however, face the truth when this whole thing blows up in their faces. Then there will be a wailing and gnashing of teeth, a longing for better times past.

Mon, 12/24/2012 - 01:43 | 3092371 mick_richfield
mick_richfield's picture

I don't think that most of them will ever face it.

I think that when the Last Wave comes, they will simply turn their backs.

The people who want reality to conform to their fantasies will be congratulating themselves that "At least we were good people!" even as the salt water rises above their cities.

 

Sun, 12/23/2012 - 21:52 | 3092090 stant
stant's picture

how are all those french and expat americans gona get along in singapore

Mon, 12/24/2012 - 14:48 | 3093410 etresoi
etresoi's picture

Only a fool, who relies on mass media, would consider Singapore.  Det yourself an education.

Mon, 12/24/2012 - 00:15 | 3092070 topspinslicer
topspinslicer's picture

Of course a more positive strategy or desired outcome would be to throw out the high tax high spend politicians and make them look for a new home

Mon, 12/24/2012 - 08:56 | 3092534 Al Gorerhythm
Al Gorerhythm's picture

They have nothing of usefullnes to offer. A French career politican would enrich the Belgian nation how? Oh, yeah, there is one pitch. "Hi. I've heard you don't have a government. I'm here to help". 

Sun, 12/23/2012 - 21:23 | 3092051 Winston Churchill
Winston Churchill's picture

Wonder what the US figures are since the re election of our 'dear leader ' .

I know the capital is going fast ,but what about its owners ?

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