The Socialist Counter-revolution Begins: France's Richest Man Seeks Belgian Citizenship

Tyler Durden's picture




 

A few months ago when the new French socialist president gave details of his particular version of the "fairness doctrine" and said he would tax millionaires at 75%, we said that "we are rotating our secular long thesis away from Belgian caterers and into tax offshoring advisors, now that nobody in the 1% will pay any taxes ever again." While there was an element of hyperbole in the above statement, the implication was clear: France's richest will actively seek tax havens which don't seek to extract three quarters of their earnings, in the process depriving France (and other countries who adopt comparable surtaxes on the rich) of critical tax revenues. It took three months for this to be confirmed, and with a bang at that. The WSJ reports that Bernard Arnault, the CEO of LVMH, and the richest man in France, has decided to forego hollow Buffetian rhetoric that paying extra tax is one's sworn duty, and has sought Belgian citizenship.

From the WSJ:

Bernard Arnault, France's richest man and chairman and chief executive of LVMH Moët Hennessy Louis Vuitton, is seeking Belgian citizenship, a move that comes as President François Hollande prepares to press ahead with a controversial tax on the country's wealthiest citizens.

 

Georges Dallemagne, president of Belgium's naturalization commission, said Mr. Arnault's case was filed at the end of August and will be "treated like others." Mr. Dallemagne said the process would take until "early next year, at best."

 

Though the LVMH titan denies his move is fiscally motivated, the timing of Mr. Arnault's request is sure to intensify the debate about whether Mr. Hollande's tax policies are sparking an exodus of the country's rich.

As a reminder, it took Monsieur Hollande four months to reneg on his promise to never bailout evil banks, when just last week he bailed out the second largest French home loan specialist, in the process pledging tens of billions in taxpayer funds. Precisely what he said he would not do. We expect Hollande will also reneg on his populist promises of exorbitant taxation of the wealthy once the Arnault backlash spreads among the remainder of the French "1%", who just happen to pay the bulk of French taxes.

On the other hand, perhaps it won't, and just like the US, France will become increasingly reliant on debt to fund its ever increasing budget deficits. As we showed before, this is the breakdown of how the US funds its $4 trillion (and growing) cash needs. What is obvious is that with time more and more of the funding need will be met through debt issuance, and thus, debt monetization.

Paradoxically, and a continuation of our article from yesterday on the mechanics of QE, the US will need to raise its debt issuance, and thus accelerate its fiscal profligacy in order to allow Bernanke to monetize more debt, so that more brand new money can enter stocks (recall that the Russell 2000 has been the Fed's only mandate for years) via the Fed's LSAP channel, without impairing the liquidity of the now very much limited long end of the Treasury (and MBS) market.

Finally, it wouldn't be the New Normal if this latest development in the socialist backlash was not accompanied by a hollow statement signifying nothing:

LVMH confirmed Mr. Arnault's request in a statement, but stressed the billionaire would remain a taxpayer in France.

For one more week? One more month? In other news, subprime is contained. And speaking of amusing, and very much hollow, rhetoric, we wonder if Mr. Whitney Tilson, who may or may not be a millionaire any longer, still endorses this April 11 point of view:

A millionaire for higher taxes

 

Whitney Tilson is a hedge fund manager and a member of Patriotic Millionaires for Fiscal Strength.

 

I am part of the 1 percent of the 1 percent. By that I mean that I am fortunate to be a wealthy American and I say, “It’s okay to raise my taxes.”

 

This morning I was at the White House supporting President Obama in his call for Congress to pass the “Buffett rule.” This legislation — inspired in part by Warren Buffett’s exasperation upon learning that his assistant paid a greater percentage of her income in federal taxes than he did — would require anyone whose income exceeds $1 million a year to pay a minimum 30 percent in taxes. It would hit me hard. I haven’t finished my taxes for 2011, but in 2010, my federal tax rate was 21.4 percent; if the Buffett rule had been in effect, my federal tax bill would have been 40 percent higher. Some years, my taxes would probably be more than 50 percent higher.

 

Why am I okay with this? The answer has to do with simple math and basic fairness.

 

This country is running enormous and unsustainable budget deficits that will bankrupt us all if they are not narrowed — and there is no way to do that without both cutting spending and raising revenue. (Grover Norquist’s anti-tax pledge is pie-in-the-sky fantasy and dangerous demagoguery.) Everyone is going to have to make sacrifices as part of a comprehensive budget deal along the lines of Simpson-Bowles, with tens of millions of people getting smaller entitlement benefits, for example, and tens of millions of people paying higher taxes.

 

It’s not class warfare to say that people like me — who aren’t suffering at all in these tough economic times, who are in many cases doing the best we’ve ever done and who can easily afford to pay more in taxes with no impact on our lifestyle — should be the first to step up and make a small sacrifice.

 

I think most people agree with the idea of shared sacrifice, but for many, when push comes to shove, that principle goes out the window. I don’t kid myself that I’m making any real sacrifices. The men and women who have been fighting for the past decade in Iraq and Afghanistan — thousands of them coming home in coffins or missing limbs — are making true sacrifices. And when they enter the domestic workforce, they shouldn’t have to pay taxes at a significantly higher rate than the vast majority of millionaires pay.

 

Some critics of the Buffett rule point out that it would raise only an estimated $47 billion over 10 years, which is a sliver of the 2011 deficit of $1.3 trillion, let alone the national debt of $15.6 trillion. They’re right that this, by itself, won’t be enough. But we have to start raising money somewhere, and if it isn’t from people like me, it will have to come from people less fortunate than I am. Think of it this way: Every billion dollars not raised from millionaires is equal to a million average U.S. families each paying an extra $1,000 in taxes. That would be real hardship for a lot of families that, unlike mine, are struggling to make ends meet.

 

Other critics argue that there’s no need for anyone to pay more taxes, because our government is so ineffective and wasteful that we can generate the savings we need just by running it better. I disagree. While there’s always plenty of room for improvement, our government is actually quite effective and efficient. Our military and judicial systems and national parks are the best in the world. Unlike in countries where government corruption is rampant, I’ve never once been solicited for a bribe. And our police departments generally do a good job protecting citizens. My wife and I walk our dog in Central Park every night after 10 p.m. and have never feared for our safety.

 

I think that most people who complain about our government have no idea what they’re talking about because they’ve never been to a country with a bad government. I regularly visit Kenya (my parents retired there and my sister works there), I visited Ethiopia many times when my parents lived there, and growing up I lived for three years each in Tanzania and Nicaragua. So I’ve seen what life is like under corrupt, dysfunctional, underfunded governments. To quote Hobbes, it can be “solitary, poor, nasty, brutish and short.”

 

I am grateful for the effective government we have in this country, which is the absolutely necessary foundation for our wonderful capitalistic economic system that has benefited me so greatly. And I’m willing to do my fair share — in fact, more than my fair share — to help rein in our deficits and put this country on a more sustainable path.

Perhaps now that Whitney no longer has a need to pander to Buffett in every form, courtesy of the recent terminal blow up of his now former hedge fund T2 aka BRK/C (in everything but return of course), he may readdress his feelings on the matter.

Finally we leave readers with what we said last time we addressed this issue:

The good news is that with the entire world set to adopt 100%+ taxes on "wealthy" individuals as defined arbitrarily by Ph.Ds, there will be no place to hide.

The irony of course, is that while the central planners give with one hand, by ramping stocks through the issuance of unrepayable debt, which benefits primarily the 1% the bulk of whose assets are in equity-related products, with the other they demand an ever larger pound of flesh in the form of ever more creeping taxation. Sadly, what should be well-known by now is that the "rich" (whether defined by the "fairness doctrine" or otherwise) always win, and it is the poor and the nearly defunct middle class that ends up picking up the pieces. It always has, and it certainly will this time around as well.

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Sat, 09/08/2012 - 10:49 | 2774452 Temporalist
Temporalist's picture

How do you say...Liberté?

 

Sat, 09/08/2012 - 10:53 | 2774460 Winston of Oceania
Sat, 09/08/2012 - 11:02 | 2774488 Overfed
Overfed's picture

The real deal, not that LvM institute of Canada horseshit.

Sat, 09/08/2012 - 11:07 | 2774497 CrockettAlmanac.com
CrockettAlmanac.com's picture

James Miller has 18 articles published at mises.org

 

 

James E. Miller holds a BS in public administration with a minor in business from Shippensburg University, PA. He is the chief blogger at the Ludwig von Mises Institute of Canada and a current contributor to his hometown newspaper, the Middletown Press and Journal. See his blog. Send him mail.

 

http://mises.org/daily/author/1560/James-E-Miller

Sat, 09/08/2012 - 12:27 | 2774686 Hype Alert
Hype Alert's picture

All taxes are collected at gunpoint really.  This is the reason the EU wants to become the United EU, so they can enforce the peripheral countries to get in line.  As the bankers/government expand their tentacles to the far reaches, this escaping high taxes by moving will take on different forms, such as becoming part of the political machine.

Worked for Corzine.

Sat, 09/08/2012 - 16:23 | 2775084 EscapingProgress
EscapingProgress's picture

And the masses are perfectly OK with the violence and coercion associated with government extortion...errr...I mean taxation.

Sun, 09/09/2012 - 09:07 | 2775945 Paul E. Math
Paul E. Math's picture

Tax rate is not just irrelevant, it's FUCKING irrelevant.

Tax me at 75% and I will just increase my income so that my take home compensation keeps up with and exceeds your stupid tax increase.

I'm the 1%, I own you and can set my income at whatever I want.

P

Mon, 09/10/2012 - 13:56 | 2779109 e-recep
e-recep's picture

meh, another hollow slogan hanging there in the air supported by nothing.

Sat, 09/08/2012 - 11:31 | 2774561 samcontrol
samcontrol's picture

ARGENTine......

My father was a visionary , we left France 35 years ago.
He actually said at the time, " these socialists will fuck everything up "
Miss you dad!

Sat, 09/08/2012 - 11:36 | 2774577 bobnoxy
bobnoxy's picture

Yeah, we're so much smarter here, with almost $19 trillion in federal, state and local debt and about $60 trillion in unfunded liabilities, and an economic crash in 2008 that spread around the world!

The world leader in profligate spending and self destructive debt. We're number 1!

Sat, 09/08/2012 - 14:24 | 2774906 Never One Roach
Never One Roach's picture

Property taxes edging up;

No new roads unless they are Toll Roads;

Sales tax increases;

Internet sales tax begins this Fall;

Before you know it, they will pass a "death tax"...double taxing all your stuff when you die.

 

Sat, 09/08/2012 - 16:48 | 2775113 Whatta
Whatta's picture

we are pretty good at bombing and killing too!!!

Mon, 09/10/2012 - 13:59 | 2779119 e-recep
e-recep's picture

but the entrecôte should be better.

Sat, 09/08/2012 - 15:06 | 2774967 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

America has socialism too but it's the kind that goes to the 1/10th%:

Gov't Spending on welfare programs - $29 billion

Gov't Spending on oil & gas giveaways: $59 billion

 

Like Exxon needs a leg up from the taxpayer...fer chrissakes

Sun, 09/09/2012 - 14:04 | 2776390 sessinpo
sessinpo's picture

CATO Institute (Often cited as libertarian biased) would differ.

http://www.scribd.com/doc/88767476/The-American-Welfare-State-How-We-Spe...

According to research by Michael Tanner, government spends over $660 Billion to fight poverty and the individual states collectively add an additional $200+ Billion.

 

However I think the difference is in the definition of welfare you are using compared to others. Many would substitute welfare with entitlement programs such as SS, Medicare and Medicaid. I don't dispute you because I understand the reasoning that we pay taxes to support these programs, thus we should be "entitled" to the benefits. If you want to get into a debate about whether they are sustainable, that is another matter.

 

Anyway, I will leave you with this fact, Oil companies uses the same tax breaks that manufacturers use, so to attack Exxon, you must also attack every manufacturer. You want to pick on oil companies that DON'T have a high profit margin compared to some other industries, let's just ban their profits. And when those oil companies have stopped exploring and drilling for oil because they are so evil, you can pay $20/gallon because the supply has dried up.

Sat, 09/08/2012 - 15:12 | 2774979 Translational Lift
Translational Lift's picture

Once again to the assholes in DC and elsewhere.....Socialism only works for a short while.....eventually you run out of other peoples money.....or people and corporations just leave as more and more currently are.  Already DC is making it more difficult to leave with what you have and it will get worse.  This country is already broke....$16 trillion deficits and $55 trillion in unfunded liabilitiesAre you f'n kidding me??!!

Sat, 09/08/2012 - 21:24 | 2775412 philipat
philipat's picture

"The problem with socialism is that eventually you run out of other peoples' money"

-Margaret Thatcher

Sat, 09/08/2012 - 22:34 | 2775501 Poor Grogman
Poor Grogman's picture

Clearly that is why we are moving so quickly to conclude the NWO. It is essential that taxes be harmonized and thus collected fairly across all parts of the globe.

Oh did I mention "fairness" and " harmony" not to mention " social justice" " unicorns" and "peace in our time".

/sarc

Peak B/S bitchez....

Sat, 09/08/2012 - 11:35 | 2774574 DoChenRollingBearing
DoChenRollingBearing's picture

@ Temporalist

+ $55,000

A better translation might be: "L'Or, Putainz"!

Sat, 09/08/2012 - 12:31 | 2774690 LMAOLORI
LMAOLORI's picture

 

 

Liberté? It seem's by getting the hell out.  Funny thing though is alot of the people who say they want more taxes like warren buffoon sure find plenty of ways not to pay them in the U.S. he for example hides his Billions in bill gates tax exempt foundation.  In other words obama's crony capitalist welfare queen warren wouldn't even be affected if the buffet rule was enacted. So it was really just obama talking smack to rile up his socialist masses. Hypocrites and look how the elite liberal's that supported obama have started renouncing their citizenship and fled this year.

 

 

Johnny Depp Flees France Over Tax Hikes

 

Will Smith Stunned At Proposed French Tax Rate After Praising Taxes

 

 

Sat, 09/08/2012 - 13:04 | 2774770 Hype Alert
Hype Alert's picture

Awesome!  Aren't hypocrites wonderful?

Sat, 09/08/2012 - 12:59 | 2774759 Azannoth
Azannoth's picture

Well citizenship does not matter when it comes to paying taxes(unless you're American or North Korean) I am not a German citizen but pay 100% German taxes because I work here so this guy only has to Emigrate to lower his tax burden not change citizenship.

This article is Seriously Misleading it lets you believe that changing your citizenship is the only way of paying less tax when if fact citizenship has nothing to do with taxes(except for Americans and NK) it's where you work/live that determines that

Sat, 09/08/2012 - 13:37 | 2774826 bank guy in Brussels
bank guy in Brussels's picture

People are moving to Belgium because it's a nice little place ... one of Europe's best-kept secrets for a totally wonderful place to live.

Fun hit song - mostly in English - by a chap from Liverpool who happily lived the final several decades of his life here -

'It's Great to Be a Belgian'

« With a beer glass in my hand

Then you must understand

I'm a Belgian, and nothing worries me! »

http://www.youtube.com/watch?v=uTqknJDZrlI

Sat, 09/08/2012 - 13:49 | 2774844 LMAOLORI
Sat, 09/08/2012 - 16:26 | 2775089 lemonobrien
lemonobrien's picture

GOLD.

Sat, 09/08/2012 - 16:44 | 2775103 falak pema
falak pema's picture

bold but not sold to Mammon.

Nor to mummy, nor to bearded daddy.

In fact sold to doubt.

Ah doubt, its the source of enquiry, and that is the salt of innovation and that is the pepper of humiliation; as innovation requires humility to stay on track. And not become an instrument of torture to put people, simple ones, on the RACK to prove you are Baal. 

We are back to square one as the cycle rebegins; where what you earn you spread around like manure, instead of putting it in the bank; for the Banksta brigade of scum rats! 

You're a true adventurer and what more needs be said to guild the lilly of he that rounds the corner not knowing what life has in store for him. 'Cos to him the desire to CONTROL all is anathema. He is not of that race of know-alls who hate to take a fall. Baal of Wall street cabal. 

Sat, 09/08/2012 - 10:52 | 2774458 Xibalba
Xibalba's picture

So much for 'All for one, and one for all'.

Sat, 09/08/2012 - 11:32 | 2774565 DoChenRollingBearing
DoChenRollingBearing's picture

Well, OK, + 1...  

 

But, if I were REALLY, REALLY RICH, I would not hang around to get skinned for 75% of my income.  Even if I were French, mon Dieu!

Sat, 09/08/2012 - 11:47 | 2774593 bobnoxy
bobnoxy's picture

So much for ''I am my brother's keeper'', and ''from those with much, much is expected''. Probably just another failed ideology, huh?

Sat, 09/08/2012 - 11:59 | 2774620 akak
akak's picture

Don't you really mean, "From each according to his ability, to each according to his means"?

That is the philosophical underpinning of most present-day would-be statist planners such as yourself, isn't it?

Sat, 09/08/2012 - 12:09 | 2774638 bobnoxy
bobnoxy's picture

No, dumb ass. Actually, those quotes are from the Bible. You know, featuring Jesus, who I'm guessing most of you shit for brains conservatives would think was just like you.

Pro war, pro gun, pro death penalty, pro deregulating the banks, and tax cuts for the richest, right? Oh, and let's cut those social programs for the poor too, 'cause Jesus had no time or concern for the poor.

Sat, 09/08/2012 - 12:20 | 2774668 nmewn
nmewn's picture

At least two of His disciples carried arms. They were called swords back then. Luke 22:35-38.

You're quite the dis-info specialist aren't you?

Sat, 09/08/2012 - 12:21 | 2774670 akak
akak's picture

Oops, BobNoxious, your red team/blue team slip is showing.

For your information, I am NOT a conservative, and would thank you for refraining from making such simplistic and erroneous assumptions.  But your own statist credentials here are beyond dispute --- trying to dress them up in Christian rhetoric is about as effective as a child thinking he can hide from his parents by sticking his head under the covers while his butt is still prominently in view.

Sat, 09/08/2012 - 12:27 | 2774687 bobnoxy
bobnoxy's picture

So you're a liberal too? And I'm no Christian either, but think it's odd that so many of you right wingers are. The rest of what you said I just didn't get.

Sat, 09/08/2012 - 12:47 | 2774737 akak
akak's picture

 

So you're a liberal too?

LOL!  Again with your blinkered inability to see beyond the hopelessly limited red team/blue team paradigm.

(Cluelessness)3

Sat, 09/08/2012 - 13:19 | 2774794 Ricky Bobby
Ricky Bobby's picture

Hey bobby try as you might you are not pinning your left right dialectic on us. I doubt you really believe it but of course it serves your masters well.

Sat, 09/08/2012 - 15:46 | 2775039 nihilist
nihilist's picture

Here you go shitt wad let me make it easier for you, www.huffingtonpost.com. You'll enjoy it over there, with your fellow shit ... err ... deep thinkers.

Sat, 09/08/2012 - 16:42 | 2775102 Rogue Trooper
Rogue Trooper's picture

Wow, do you know 'Max Fischer'?

Sun, 09/09/2012 - 05:40 | 2775820 fiftybagger
fiftybagger's picture

"And I'm no Christian either"

Thanks for letting us know, as if that fact was not glaringly obvious from your mangling and misapplication of the Scriptures:

"Am I my brother's keeper?"  The snide remark of a murderer when caught.  See Genesis 4:9

"For unto whomsoever much is given, of him shall be much required"  See Luke 12:48.  A statement regarding the return on investment in both earthly and heavenly kingdoms.

Care to try again?

http://www.brotherjohnf.com/


Sat, 09/08/2012 - 17:05 | 2775129 rodocostarica
rodocostarica's picture

So Akak, are you a liberal then? Obama guy or libertarian maybe?

Sat, 09/08/2012 - 19:44 | 2775326 StychoKiller
StychoKiller's picture

Liberalism, properly understood, is a dynamic, radical force pushing for the liberation of individuals from arbitrary control by others.  It advocates private property, limited government, social tolerance and peaceful relations with all.  Over the centuries and across the world, there have been voices calling for individual freedom.  Contrast liberalism with its nemesis, the conservative force of socialism.

How the Republicons tarred the Decepticratic party with this label, I'll never know, since most contemporary Decepticrats support "Social", and yes, "Progressive", ideas, which seem to always require Federal Govt involvement in our lives.  I believe that the Decepticrats CHOSE to use the "Liberal" label to identify what they stand for, even though it has no basis in reality today.

The Republicons are no "Conservatives", either, as they've proven every time they've been in power and expand the Federal Govt, just like the "Social" and "Progressive", Decepticrats.

All of this just points out that the labels they use to identify themselves are meaningless.  BOTH parties should be called the "Leviathan Party", if truth be told!

Sat, 09/08/2012 - 12:35 | 2774707 eatthebanksters
eatthebanksters's picture

I have several questions regarding these tax the rich schemes.  1. Where does it end?  2. When the liberals keep spending and run out of money again, will they come back to the same trough?  3. If there were no rich people to bail ou out, what would you do? Remember, before there was civilization it was each man for himself and only the strong survived...it could end up that way again.

Sun, 09/09/2012 - 00:37 | 2775678 Bananamerican
Bananamerican's picture

"before there was civilization it was each man for himself and only the strong, the self-exalting, the mendacious, the brutal and the ruthless, survived"

"They still do. Heh"-Lloyd Blankfein

"The meek shall inherit the earth" -Jesus

"...about 6'x3' of it" -the 99%

Sat, 09/08/2012 - 15:24 | 2775004 Translational Lift
Translational Lift's picture

bobobnoxious - ie dumb ass/shit for brains:

Marx says that this is rational and necessary, and that once society advances from the lower phase of communist society and work becomes life's prime want, distribution will occur along different lines. During the higher phase of communism, the standard shall be "from each according to his ability, to each according to his needs".

Sat, 09/08/2012 - 17:43 | 2775176 No Euros please...
No Euros please we're British's picture

Maybe you should just change your name to bobobnoxy.

Sat, 09/08/2012 - 22:02 | 2775456 goldsaver
goldsaver's picture

Really Bob? You are going with biblical quotes? Please provides a quote were Jesus the Nazarean says that in order to be my brother's keeper I have to give 50% of my income to the government so they can do as they choose with it up to and including taking care of people who are not my brothers? Or where it says that much is expected BY THE GOVERNMENT who produces nothing from those who do produce?

Sat, 09/08/2012 - 12:03 | 2774631 DeadFred
DeadFred's picture

Hollande is an Obama cloneling, it's not about hope, change or tax revenues. It's about sound bites aimed at power and re-election. Everything is talk-talk now days because they all know there are no workable solutions available. 

Sun, 09/09/2012 - 01:47 | 2775737 uff the fluff
uff the fluff's picture

That may be so, but please tell me you don't think that Rs are any better. Pretty please?

Sat, 09/08/2012 - 12:12 | 2774648 nmewn
nmewn's picture

The first "quote" deals with someone lying to coverup his own brothers murder...clearly he was not his brothers keeper was he?

Sat, 09/08/2012 - 12:18 | 2774660 bobnoxy
bobnoxy's picture

I stand corrected, from Cain who killed his bro.

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