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The Most Despised Tax-And-Retreat French President Sinks Deeper Into Economic Quagmire
Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter
The French habitually appear to be on the verge of having had it. But the incidents have been getting denser, more frequent. There were the protests in the Bretagne and elsewhere, followed by "operation snail" where 2,100 heavy trucks drove side by side down major expressways at a snail’s pace, with everyone behind them going nuts. Every day, there are protests organized by different organizations. On Thursday, the farmers went to town, to Paris more specifically. They were getting there by driving their tractors on major highways, setting up roadblocks as they went, snarling traffic for miles.
They’re all protesting the relentless onslaught of new taxes. At first, buoyant from an election victory, President François Hollande and his government went after the rich then quickly hit even modest households, farmers, truckers, craftsmen, everyone who does or buys anything. Because it’s never enough. In January, the Value Added Tax hike will take effect. For the top tier of items, the VAT will only increase from 19.6% to 20%. But for some of the lower tier items, it will be jacked up massively. For example, for the equestrian industry, the VAT will jump from 7% to 20% – hence the protests the other day.
Now the farmers have had it. While at it, they’re also protesting EU rules on how they should run their businesses and anti-pollution laws that would limit the use of tractors on some days. The word "insurrection" is showing up in the media, though it's still more an exaggeration than a description. "Fiscal discontent” is better, but not broad enough.
After 18 months in office, Hollande's ratings have plunged to the lowest levels of any president since 1958, according to an Ifop/JDD poll, the only poll going back this far. A mere 20% of the French were satisfied with him; 17% among workers and employees; 15% among merchants and craftsmen. Even his erstwhile supporters have abandoned him.
And 79% were dissatisfied. Cited were "social desperation" of the people affected by his policies, but also his leadership qualities, his apparent "inability to decide," his "lack of discipline," his tendency to make decisions and then, when the volume gets too loud, withdraw them. It leaves the country rudderless.
Who could do a better job? Maybe Santa Claus.
Because no one else seems to be able to, in the eyes of the French. Turns out, 74% think that any of the major figures of the UMP, the party of former President Sarkozy, would do worse or no better. And on the right-wing where Marine Le Pen reigns with her National Front (FN)? 79% of the respondents think she’d be worse or no better than Hollande. There simply is no savior in sight. Much less a solution.
Spending by the government accounts for more than 56% of GDP, the highest in the Eurozone. Even thinking about cutting these outlays would be political hara-kiri. To fund this public mastodon and bring the deficit down to 3% of GDP by 2015, and into compliance with EU stability criteria – it would require a miracle – taxes must be extracted from everyone and everything in the anemic private sector.
But the math just shot craps.
Despite incessant tax increases, the government just confessed that revenues would be about €11 billion less than expected. The shortfall was spread over VAT, income taxes, and corporate taxes. French pundits are now talking about “fiscal saturation,” the point where raising taxes will lead to lower tax revenues, as struggling households and businesses will jump through hoops to limit the taxes they pay. They might work off the record, cut back on purchases, or move business entities to other countries. One of many brutal disappointments for Hollande. Nothing seems to work. Squeezing the French has reached its limit.
French businesses already pay a total of 64.7% of their pre-tax income in taxes, according to the just released report by the World Bank and PwC (PDF). The report compared 189 countries and measured total taxes paid in 2012 – including income taxes, payroll taxes, employer paid “social" taxes for healthcare and retirement systems, real estate taxes, capital gains taxes, etc. – as a percent of pretax profit. France’s total was the second highest in the EU, after another economic star, Italy, and far above the EU average of 43.1% and the worldwide average of 41.1%.
In France, labor is taxed the most, with employers paying breath-taking 51.7% of their pretax profit in payroll taxes, the worst in the EU and possibly in the universe. Income taxes eat up only 8.7% in pretax profits. As anywhere, sagging profits and a myriad of deductions, loopholes, credits, and other devices allow most companies to get around high tax rates. “Other” taxes consumed another 4.3% of pretax profits.
Confiscatory payroll taxes do one thing very well: stop job creation in its tracks.
Companies are hurting. Of the 15,000 privately held companies that a recent study by accounting and audit association ATH analyzed, 20% lost money in 2012. Over the period between 2008 and 2012, revenues inched up a total of 7%, not even enough to keep up with inflation (8.8%). Net profits plunged 18% during that time. This “permanent degradation” is endangering the survival of many of these companies and is crimping “the investments necessary for the competitiveness and sustainability of these companies," the report observed.
Driven to desperation by the morose economy, the abysmal poll numbers, the tax quagmire, and mounting anger on the street, Hollande’s government is going to attack the problem decisively and head on: another tax reform! This time, Prime Minister Jean-Marc Ayrault wants to start from scratch. A mega project would take up the remaining three and a half years of Hollande’s term. Hope? In the same breath, he said that it would be revenue neutral! They just don’t get it.
Revenue neutral isn't going to help the economy. Households and smaller businesses need room to breathe. Yet, bad as it is, no one believes it. Because in France, taxes have the insidious habit of creeping up relentlessly.
These are among France’s real problems. But now France's Financial Markets Authority decided to hound bloggers who’d dared to doubt the veracity of the sacred balance sheets of the even more sacred French megabanks – including Mike “Mish” Shedlock in the US. It’s getting curiouser and curiouser. Read.... Gagging Doubt: French Crackdown On (American) Bloggers Who Question Megabank Balance Sheets
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Yet another socialist experiment circling the drain-hole.
When people voted for this joker 18 months ago, what did they think was going to happen when he re-hired all the laid-off teachers etc.?
Yeahbut the numbers on business profits are 11000% bogus, you have to show a pro-forma loss to avoid the taxes. I'm sure it's bad and getting worse, but the numbers are a lie, all government numbers these days are absurd and obvious lies.
"They’re all protesting the relentless onslaught of new taxes."
"Spending by the government accounts for more than 56% of GDP, the highest in the Eurozone. Even thinking about cutting these outlays would be political hara-kiri."
Damned if they do and damned if they don't. Either spendiig has to be cut or taxes increased.
Or just skip ahead to the VIth Republic, awaiting the Caliphate.
OKAY!!! EVERYBODY IN THIS POST WHO WAS NEGATIVE IS UNDER ARREST!!!!
KEEP YOUR HANDS IN THE AIR UNTILL A FRENCH INTERVENTION SQUAD WILL BRING YOU IN!!!!
NOW!!! YOU WILL SEE WHAT FRENCH EFFICIENCY IS!!!
HAHAHA!!!
...
can you guys all mail your adress to sauce@Hollandais.fr and also make a small deposit for transportation costs, administration fees et all.... 50.000 euro will do.... OR YOU WILL HAVE TO KEEP YOUR HANDS IN THE AIR UNTILL THE END OF DAYS!!!!
The French people need a paradigm shift in their attitudes about free market economics----taxes, regulations, small government, lower government spending, and achievement. The US needs to follow the same advice so as to avoid the pitfalls of the French, Greek, Spanish, and Italian governments, all of which have wrecked their economies, perhaps irreparably. The French won't be electing a better government till the people get smarter and less greedy for free stuff, and regulation. Higher taxes are only a response to what the people have been asking for, for decades.
"The French people need a paradigm shift in their attitudes about free market economics----taxes, regulations, small government, lower government spending, and achievement. The US needs to follow the same advice so as to avoid the pitfalls of the French, Greek, Spanish, and Italian governments, all of which have wrecked their economies, perhaps irreparably"
Greece has been around for centuries. There is nothing is economically irreparable. As for the U.S., things get worse before they get better. It is the nature of things.
The highest aspiration of both students in France and their parents is a cushy permanent civil service job. You don't get that, you are little people, out in the sick desperate hard cold world, and that's that.
Let's face it, when people turn to government for favours, solutions and handouts, its response is to grow the debt or to increase taxes. In the process the beast becomes bigger, less agile and its appetite continues to grow. The process repeats again and agin.
The crux of the problem is that people have been led to believe that governments will continue to provide for them and have therefore not made contingency plans for when governments default on their promises.
That is when the doodoo will really hit the fan.
By the way, Mr Hollande, I think the Vichy government was probably more popular than you are at the moment.
But enjoy your lousy ratings because they can only get worse from this point on.
At some recent point in their history, France produced a GDP equal to Slovakia. When Slovakia disappeared behind the Iron Curtain, it plummeted, and France's went up.
Now both are working hard to change places.
I am taking a trip to Europe before the holidays this year and I specifically avoided flying through Paris. Christmas holiday is just too risky going through Paris in the holidays....
Chose Amsterdam for a few bucks more....
I live in rural northern california and the state decided that anyone who lived in the sticks could pay a fire "service" fee of about $150 per building on developed property. After watching my 401k nearly disapear in 2008 I decided that I would have a self administered 401 k and bought some local real estate. Now I have two $150 payments to the state. In addition to that I have two local $80 taxes to the local volunteer fire department of which I am a member. The other day I was in a meeting of the fire auxilary and they all decided it would be a good idea to raise the local tax. It seems the people heading the charge to do this own no property themselves or are bent on taxing themsleves out of existence. The bottom line is I'm being taxed to death and providing my own fire protection. The end of the middle class is very near my friends.
California Prop. 13 and the decline in assessed values are part of the reason we are taxed thru other avenues. The money's got to come from somewhere to keep these agencies open. Here are two examples: we inherited a property that was assessed for 350,000 in 2009. After twice filing for a reduction, we are now assessed at 210,000 (thanks to foreclosures being the main r.e. activity). Huge savings for us but deadly to the county and local govt. Second: We've owned a commercial/residential property for decades. The texes on this 5000 square foot, centrally located building are around $1000. a year! Thanks to Proposition 13, which capped increases at 3% per annum, beginning in 1978.
Governor moonbeam started California on this path in his youth, buying up votes from the public service unions with taxes on everyone else. This is the French model.
"I live in rural northern california and the state decided...the bottom line is I'm being taxed to death"
Your First mistake was to live in California. Your Second mistake was to not move out of California! To be honest I have no sympathy for you. You chose to stay in in live in a socialists state. You really only have yourself to blame! If your smart you will leave CA and the sooner the better!
There's a lot of benefits to living in the SF bay area,if you have a good job like I do then you can make a ton of money.I mainly don't like the gun laws and the policies that will help destroy the country but it doesn't really even matter now.
There's a lot of benefits to living in the SF bay area,if you have a good job like I do
Not really relevant:
1. There are plenty of other places that have good pay jobs the the SF area. I have a job with very high pay and I don't live in SF or anywhere near Kalifornia. I've made and saved enough money to go Galt next year and thats exactly what I am going to do. I refuse to work when the majority of my paycheck goes to govt that is using my money to take away my liberty.
2. in SF, a very large chunk of your pay goes to pay for the much higher cost of living. There are places where you will make less money, but your cost of livng is a lot cheaper than SF
3. Your Tax money is being used against you to take away your freedoms and empower those in gov't. You are not free. You've become a willing slave by remaing in SF to pay hideous tax rates. Even the Serfs of the Middle Ages has a lower tax rate than you do!
The thought has certainly crossed my mind. I also have a place in Mexico but no matter where you go in this world there is someone with their hand in your pocket to some degree.
The non-socialist states are becoming fewer and fewer. As one fellow posted here that Texas is being destroyed by Kalliefornians. If you own any property than the govt union paper pushing communists have you down as a mark to pay for their gold plated pensions.
"If you own any property than the govt union paper pushing communists have you down as a mark to pay for their gold plated pensions."
California passed Prop. 13 back in the 1970's. San Diego and San Jose recently passed laws changing pension rules for future employees. Vallejo went bankrupt and did not change pension rules and are already facing bankruptcy again. Pension rules are going to change, as the tax payers simply cannot afford them as they are. Push will come to shove.
Those pensions as you said are only gold plated. A mere scratch will reveal the tungsten lurking under their surface.
i disagree. live wherever you're happy and play their game for now. just remember that they're running short on time. prepare yourself for the big reset, protect your savings in precious metals and international diversification if it's financially realistic for you, and try to change as many minds as you can in the process. if everyone runs there will be nowhere left to run to.
Why don't you provide a list of good alternatives. We have actively searched for many years to find better places. One came out to be near ideal only to find the property tax was 17% and our cost of living would be not much better because I would not have a job and my husband would have to fly into his work at least once a month. If my husband died, I would have to move back and pray I could get a job again. This is very uncertain due to Obama care has got employers spooked.
When you have lived somewhere for 30 years and have networked with many like minded people it is very hard just to pack up and start over. Our family farm is in WA which is paid off and will be inherited by my husband is our " escape" if needed. It is not perfect but survivable. Yes, Cali is crazy but the rest of USA is not sane. Do not judge Californians by the MSM. Many of us are rugged, freedom loving individuals that are ignored and marginalized. We have nothing but contempt for San Francisco and Sacramento. Don't discount us.
Miffed;-)
I live in WA and did the WA-Los Angeles flights every week for almost three years on my own dime to keep a life and keep money coming in. I am now back in WA full time and now commuting via the internet.... Miss the sun but not the travel....
In France, In Europe...the crystal ball of our future. Bitchez, we are fuct.
Everywhere inthe US, including my mostly conservative TX, everyone wants more and more a piece of my ass. Higher taxes local, state, national. Higher fees on everything...and no end in sight.
We will be Europe. Freedom is already taken...they are after our heart and souls now. Bend and serve the State.
"Everywhere inthe US, including my mostly conservative TX, everyone wants more and more"
TX is probably no longer conservative. All the socialists from CA that can't live in the economy the sowed are moving to TX and taking ove like a virus. TX should have implemented border control, not with Mexico, but with California!
And there's a reason why this debacle is receiving no coverage at all in the corporate press in the US.
Sounds like what happens to a country made for lazy hippy bums.
The French wanted him and elected him and just like the good ole USA now we and they will have to live with it. His campaign was all about taxes and more taxes on the rich and more taxes on everyone. Freebies for all except the evil fucking rich and those evil people that actually work and produce something. The rich leave and the middle class gets screwed. We will never get it.
Stupid people forget all of their freebies are not free. Coming home to roost soon.
http://seekingalpha.com/symbol/scty?source=search_general&s=scty http://en.wikipedia.org/wiki/Ship-Submarine_Recycling_Program
France, where the answer for a failing socialist state was to elect a bigger socialist.
How is that working for ya?
All good in the neighborhood - this is excellent news- hoping for failure ASAP - go team france!!!!!!!!!!!!
tax them to the streets, broke jobless and destitute with the RAGE neccesary to "get-er-done".
It's a no-win situation. Even the intelligentsia of the progressive wing, such as those over at Naked Capitalism, favor continual deficit spending for the sake of keeping employment up. They don't seem to realize that deficit spending is a tax, and a highly regressive one. The only thing that works is for a government to default on debt and move forward with a balanced budget. But politicians don't like a system where they can't buy votes by spending beyond their means.
running capitalism naked and "running the DOE" are two different things. (let alone all the other Government Programs.) Saying "i'm a keynesian" doesn't mean anything. have you ever even served in the military? those are the "keynesians." get yourself a gold standard "then you can play the part of John Maynard Keynes." until then...you're just another actor with an axe to grind. "there is no recovery without a recovery in employment and consumer demand." period. 5 years now and we still have neither incredibly. not even close actually...go ahead..."end QE." don't tell me if gold falls another 100 bucks an ounce next week "we have a huge recovery problem now" though. not that i have a problem with "normalization" of course. who's in charge of network security again? http://seekingalpha.com/symbol/t?source=search_general&s=t
Someone moved his cheese....
"Monkeyman Asks Hollande for Financial Advice."
Viva la meh!
>A mere 20% of the French were satisfied with him; 17% among workers and employees; 15% among merchants and craftsmen. <
Hitler probably had better numbers! LOL
They should have read a little history before voting for an avowed socialist.
The nice thing about (non-Diebold) voting is that most people get the government they deserve, and most French deserve Hollande. Everyone wants socialism because everyone believes it is possible, even moral, to live well at everyone else's expense. They complain about taxes but everyone wants to maintain their own subsidized gravy train, plus all the French bureaucracy to back it up. All hell breaks loose whenever anyone talks about cutting the organic goat cheese subsidy, government laundry folder service, etc. So fuck 'em. Let the boiled frogs stew in their own juice. It will be hilarious watching the French go Mad Max.
<----- Advanced mathematics
<----- Guillotines, bitchez!
Poll: What is France's greatest contribution to humanity thus far?
The Enlightenment.
I thought BIC created that for the tobacco industry.
Is BIC a French Company?
Hitler received 2.8% of the vote in 1928.
"Hitler received 2.8% of the vote in 1928."
By 1933 NSDAP had the largest of 33% and the most seats of any party. Germany of the early 20th century had much different political system. There were probably 30 political parties back then, compared to modern politics which has a handful or parties seeking seats at the national level.
It wouldn't supprise me a right wing politcial party will start to rise in France. Blaming the countries problems on foriegns and immigrants and siezing foriegn/immigrant wealth to pay for socialism in France.
"Start" to rise? The nationalist socialist party in France polls quite nicely.
The elite refer to us as the great unwashed masses or useless eaters.
For a more complete description and the lurid details, read "The Protocols of Zion".
We're on the same path here in the US eventually. What did France expect when Hollande was elected? That 'the rich' tax was just going to affect the 1%? No. That's always the case with populist trash glorywhore motherfuckers. So... they didn't think that eventually it would get to them also and they, too, would get bit.
Same with Obama. He started in on 'the rich' from day one. Now we're on day 1,825 and everyone else is starting to see that 'the tax' is on the middle class too. How else to feed the beast? And how else are you going to bribe the poor to vote for the populist trash motherfuckers? Gotta rob the middle class too. That's true Marxism. Only two classes must exist, the bourgeoisie and everyone else. *ahem* I mean what's left over, namely, the proletariat, or the pieces of shit in Washington-speak. The new 'working' subsidized ever and ever poorer.
Your argument is based on falsehoods.
Wealth in the US has been transferred UPWARD, not downward as you contend.
You have fallen for the establishment deception that the middle class are being "robbed" for the benefit of the lower class. In actuality, BOTH the middle and lower classes are being robbed for the benefit of the upper elite. Robbed not just economically, but politically, socially, environmentally, medically etc.
The TBTF bailouts, the militarism, the martial laws are not being done in support of the poorer classes. Obamacare is not designed to help the "poor". Neither the middle class nor the poor control government.
Any belief that the "poor" control government by their votes is ridiculous.
Nor do those who control government act, or intend to act, for the benefit of any but themselves.
False dichotomy.
Wealth is being transferred UPWARD and DOWNWARD, but removed from the middle just as my post said as per Cloward-Piven(ie, Marxism for dipshits). QE ad infinitum helps the rich while simultaneously state expansion wealth transfer (to purchase patronage at the ballot box) helps the poor. Remember, they are sitting on their ass at home not doing jack shit, which is the definition of another form of 'rich'.
Understand just what in the actual fuck is going on here and you'll be alright. The way the rich get richer is by BUYING the poor so the pitchforks don't come out, knowing that struggling mom & pops in the middle are too busy to sharpen their knives.