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The Socialist Counter-revolution Begins: France's Richest Man Seeks Belgian Citizenship
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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Mr.Millionaire Expat,
"The wealthiest Americans (and over the globe) have amassed an astonishing amount of wealth in the past two decades, much of it thanks to the largesse of the government and from non-productive activities."
Whats preventing you from cutting a check to the IRS? Are you admitting to some sort of crime here Mr.Millionaire? What largesse are you suggesting? Were you involved in Solyndra or Fisker? LightSquared perhaps?
"It is true that taxing the 1% will not help because of spending. But it is a symbolic gesture."
Just consider it a symbolic gesture on your part, open that checkbook wide. Give Warren Buffet something to strive for and beat.
Why just think, it could wind up in some sort of charitable bidding war ;-)
Tax the rich and starve the poor.
signed a burocrat.
Gouvernment needs your money to feed
the machine.But remember it is for your own
good,cause we know what is best for you.
http://www.youtube.com/watch?v=NCfVFxRsKQc Pink floyd:Welcome to the machine
http://www.youtube.com/watch?v=zRvPoCWElOc Run like hell
http://www.youtube.com/watch?v=G7VnToMCrwU Division bell
Choose what you would like facism or communism,TPTB loves
a good fight.Remember Stalingrad?
What is needed is something that will level the playing field without regard to economic status. Like a monster asteroid - hammer of god kind of thingy. That maniacal laughter you might hear at the very end would be me.
My name is Ozymandias, King of Kings. Look upon my works, oh ye mighty, and despair.
Like that.
I can't get behind any notion that the 1% are undertaxed. If they feel they are paying too much, leave. Sounds good to me.
All income should be taxed at the same rate, period.
0%
Of course the 1% doesn't care about raising income taxes in America. Most of them barely recieve anything in the way of taxable wages. Obamney would increase the earned income tax rate above 250k to 80% and then reduce the capital gains rate to 10%, the 1% will laugh all the way to the bank.
Welcome to FC, Bernard. Kick ass and take names.
Taxation is theft, plain and simple... You who leave for work each day are being robbed every hour...
The author of this post should learn the difference between marginal and average tax rate. 75% is planned to be applied to the tranche above 1 million euros/year.
The author of this post should also learn French and read this other post where it is explained how little these überrich men and women (or rather their wealth) would be missed in France and its economy, should they decide to leave the country.
http://blog.mondediplo.net/2012-03-16-A-75-les-riches-partiront
These überwealthy have been well attended to in the last 30 years, yet we are still waiting, hmm, at least for part of their wealth to trickle down the economy and keep it going. Does the author of this post have any idea how many blue moons we have to wait before this eventually happens? Would appreciate any educated guess.
He's not surrendering his French citizenship. He's doing what the French do best; he's strategically retreating for a few years with a sense of urgency.
FOR SALE
French Army Rifle
Never Used
Dropped Once
Contact Claude LeBeau
Please call afternoon as I sleep 'til noon
Your last statement is exactly correct. The socialists pretend to redistribute wealth to the poor and lower classes to gain favor. What actually occurs is that wealth is transfered from the middle classes to the wealthiest class. In the coming Marxist USSA, Obama's dream will be realized. The 5% elitist class will control 95% of he wealth and what remains will be the poor slave class. The middle is being systematically expunged by the central planners.
But, the Secret Agent known as "Barry X" will be at the top of the 5%.
I do believe it is corporate America which is sending middle class jobs overseas to gain low wage and zero benefit workers. Thus we see record corporate profits at a time corporations claim to being destroyed by the Kenyan socialist muslim Obama.
Odd how being destroyed by socialism goes hand in hand with record profits and record cash on the books.
WHile I am no friend of government central planning, like the Federal reserve and congress employ, I do believe the middle class has been devestated by the outsourcing of jobs and the import of masses of workers in both low wage and high tech jobs vis the visa program for foreign workers and illegal immigration.
The middle class is under attack at the low end and the high end. Corporate America has done all it can to destory middle class jobs as they seek to earn more profit via foreign work forces.
Maybe Hollande will do an "Obama" and just issue an executive order that all rich folks seeking citizenship elsewhere fortiet 75% of all their wealth... just make it up as you go along, guys... and viva Lenin, right??
The guy rambled on and on about taxes and mentioned cutting spending in passing but did not name anything on the spending side that might be cut or even give a general figure of how much might be cut. no wonder he is in the white house offering obama a blow job.
it may be more than just a bj.
bunga bunga!
How The Socialist Took Their Children's Future
@Tyler:
Is it possible you might create that chart going back to at least 1960? Thx
The new generation enemy, the State
http://www.youtube.com/watch?v=7gd6-zfeeaM
Re FRANCE's Richest Man Seeks Belgian Citizenship (to avoid taxes)
Well - at least that's one FROG that jumped outta the pot to escape the heat.
I would love to tax any private net-income above $200.000/year single, 350K couple plus an additional 100K per child with 50% or even more if it's not spend, re-invested or used for the community. I also would tax a corporate net income above 15K/month per workplace that is also not re-invested, spend or used for the community, with an allowed cash/asset reserve of 100% net-worth of the company. On the other hand, income tax should be reduced or, for lower wages, annihilated.
The problem is not the tax, the problem is if the money is still floating or not.
Haager, Did Peter Schiff talk to you the other nite by chance??
Nope. But I think I should modify the parameters - the considered numbers should firmly be lowered these days, eg. $50.000 single income/year unspend private income, 10K/month per workplace unspend on corporates. Stacking up fiat-money is a bad thing.
Well: Counting up all of their obligations has put Belgiums debt to GDP ratio at 203%: http://www.zerohedge.com/news/translating-growth-european
Mr. Vuitton will soon be joining the West Montana preppers.
Amai, met 'ne propere rugzak dan hé?
Dans les yeux de ma mere....In the eyes of my mother....un vrai belge, un grand chanssonier, a singer lightyears away from these cons bastard de lvmh
http://www.youtube.com/watch?v=vwnwPIyw6GE&feature=related
The guy should become a stateless person like Simon Black and troll the globe looking for the best place to exploit the locals! The writing is on the wall. In order for the rich to enjoy their fruits of thievery, they must fulfill their bargain with the masses: social safety nets and pensions. If they don't............US globalist military won't be able to protect them-it'll become bankrupt before then.
http://www.youtube.com/watch?v=ujh9g94wIWE
once again
Traitor to his counry, nationalize his ass!
With that much money he could defeat the NWO all by hisself if he chose to. But why would he? Belgum is probably happy to get him and others. Isn't that like the UN of Europe's headquarters?
Re France's Richest Man Seeks Belgian Citizenship (to avoid taxes)
No need to domicile in smelly, cold, rainy, old Belgium.... Bernard Arnault should talk to Mitt Romney. I'm sure Mitt would be able to recommend an appropriate nice 'n sunny tax-haven or two (for both personal & corporate liabilities)
And taking another leaf outta Mitts book, with the money he'd save, Monsieur Arnault could run for President of The 5th Republic and - if successful - write the tax-laws himself
In the meantime - if it's any consolation - my heart goes out to Monsieur Arnault and, it goes without saying, other beleaguered billionaires who might be "feeling the pinch" in these trying times.
I say let him go to Belgium, freeze his assets and push him over the border, nationalize LVMH, and don't let him back into France.
75% may be too much, but is it too much to expect these 1% guys to hand over the 45%-60% that the 99% do?
The 1%ers are the true enemy of every single 99%er.
Revolutions needed, like yesterday.
Like the revolution fought by those 1% during the Eisenhower years when the top tax rate was 90%?
Have some empathy! They didn't get to be 1%ers (or .0001%ers like this guy) by handing over 45 - 60% like the 99ers do. There's politicians to bribe -- doesn't that count for anything anymore?
The ultra wealthy are not going to leave france because of the increase of the income tax. THEIR WEALTH DWARFS THEIR ANNUAL INCOME. they are leaving because of what the prospects for the future.
The change in the tax code belies are far larger risk to the future than an increase in their taxes----they are leaving a country which will have such bad economic problems that the government will soon start nationalizing people's assets and using backhand tactics to SUE, Harras, and FINE ultra wealthy individuals as a means of extorting them. Of course the government will always have a pretext for doing so.
The only wealthy people that will be left in France, are the ones that have their corrupt tentacles on the government itself, and will thus be immune from harrasment. Worse , many of them will prey upon a weak and collapsing government---and the desperate and willing politicians in that government---to further abuse the other wealthy french people who own businesses that compete with their own----as well as increase the tax and restrictions and obligations of the average french citizen who will be protesting the govenrment by then.
socialism and fascism can work together. private interests ---individual families---can allign with the socialist state to push out private competition---while making promises to the average french working class-----promises that will one day be broken.
Anyone who gets their undies in a bundle over threats of "75% tax" are not dealing in reality. So someone threw out some number like that to make a stir, so what? I guess that's what sells on ZH.
But suppose it was not an idle threat. I, for one, who earn under 80K and pay approx. 40% in fed+state tax, would have no problem with those earning a $100 billiion paying the same tax I do.
But I bet you cannot find one billionaire who pays nearly high a percentage of tax as you or I do.
I bet you cannot find one billionaire who pays HALF as much as you or I do, on what they EARN. And how many billionaires actually EARN a small fraction their wealth?
So some people are clever with money and focus a large part of their life on getting a lot of it. Then they end up having extraordinary power over the rest of us, just for being able to accumulate money. Did anyone vote for them to make the rules, control the press, environmental quality . .
It is prudent and wise of the larger society to limit that kind of power.
I couldn't agree with you more that people making millions and billions should at least be paying what you are. But, they are not all gaming the system, many are paying lower rates because Congress has told them that's the rate they should pay. BUT, let's remember that Obama is defining rich as making over $200,000 per year, so with your pay, you are almost halfway there. Congratulations. In people's minds when they hear him jabbering on about the rich not paying their fair share they are thinking about the billionaire paying 15%, like you did. But Obama is really talking about fucking you a few years down the line, assuming life goes well for you and you get to $200,000, which I hope you do. The billionaires, as this article points out, will find ways to get around paying more. You won't, so be careful what you wish for.
And, lets' focus on the REAL problem, which is primarily spending, not revenue:
You are paying 40% Federal and State right now and you are not even to Obama rich yet. Let's say you get lucky and make $100,000 this year and you pay your $40,000 in taxes. Since we know the Federal government has to borrow an additional 40% over tax revenue to balance the budget, you really owed an additonal $16,000, but they didn't charge you, they just borrowed it. So, your tax rate is really not 40%, but rather 56%. You just aren't paying the bill yet...or maybe your kids will pay it....or maybe you'll pay it via inflation...or maybe we will default on the debt...BUT, it will be paid by someone. (Now, it's really a bit lower than 56% because 40% isn't your Federal rate, but you get the point and when you get to $200,000, you will be at least at 40% Federal).
Since spending keeps rising, it's only a matter of time before Federal rates hit 50% for those $200k millionaires and with the Feds borrowing at least another 40% over that (kindly assuming interest rates on national debt are still near nothing), all of a sudden the real tax rate to cover Federal spending is 70%.
Don't get distracted by the class warfare. Yes, the few mega wealthy need to lose their advantage, but the political rhetoric is just a way to get into your pocket. That's where the real money is.
Anyway, this is the French billionaire you should be pissed at for poaching all the young, hot chicks:
http://www.celebritybabyscoop.com/2012/04/16/arnaud-lagard-re-jade-foret-beach-bummin-around/gallery/3
Mr. Tilson is clearly a douche, bu even given that, saying how "great" American government is by comparing the US to a bunch of backaswards African shitholes is the kind of moronic low-bar-setting "logic" I would expect of a freshman liberal arts "radical". Our nation park system is the best? WHo the fuck cares about that, any way? Of course, a rich man would be very happy with the state of the American judicial system.
How does moving to Belgium help? Isn't that the very broke-dick heart of the broke-dick EU?
I love it when the .01% of the 1% like this guy show us their true colors and what they truly believe it’s all about. You can like them or dislike them, agree with them or disagree with them, but, there it is, and in the end, they’re the ones in power who call the shots. Everything else is bullshit as long as the social economic structure stays the way it is.
Obviously this guy doesn’t care much about nationality. I can imagine how little he cares about loyalty to a political party. And that makes me wonder, why does anyone in the poor or nearly defunct middle class give a flying f%^k whether they’re a Republican or a Democrat.
What does this job creator do anyways? I am just betting that his fortune has been made with lots of help from the French Government. I would bet he gets some healthy subsidies for his businesses, tax breaks, education of his work force, socialized medicine which frees him from paying health insurance premiums for his workers.
I bet if you add up the taxpayer funded imput to his business fortune you will find this guy knows how to get his fair share.
Fuck 'em. He has got his and now he runs away from a little tax increase. I bet he still wants cops and armies to protect his security, his business operations and his fortune.
Why so many people lose so much sleep over the elite 1% paying some taxes while we all know how badly us middle class folks get hammered by taxes and fees. I have no off shore accounts like romney to avoid paying taxes, nor did I run to Canada of clai a religious draft exemption to avoid serving my country.
Stop crying a river for how tough the rich around the world have got it. What's the fuck'n matter with some of you people? Like the 1% really are suffering under the terrible conditions we impose on them.
Look around you for christ's sake! The 1% just expand and expand and expand the % of the world's weath they hold. Yet you all feel so sorry for this poor billion dollar baby whi sufferes SO MUCH!
Why does the % of wealth for the 1% grow and grow if they are being taxed so heavily. They sure have won the propaganda war ! You all support them in their quest to gain control of ALL the FUCK'n wealth. They won't be happy till the 1% hold 99% of the worlds wealth. They will still piss, whine and cry about taxes when they are swimming in gold and money. Wake the fuck up!
Exactly what I was trying to say, only 10 times better.
Bingo-fuck'n-O!
What's stopping you Warren?
You didn't earn that money.
Oh, there was this tax on net wealth that came online during the first term of Pres. François Mitterrand (1981-88). The media really played it up endlessly as a great leap forward in social justice or something like that, with lots of applause splashed all over the background. Well, to give you one example, the cost of that tax after exemptions to one leading family of champagne makers was FRF 10,000 (about USD 1,300).
Citizens of France may not reside in Monaco for tax purposes. Citizens of Belgium however may. Once his application is granted, he will without a doubt give up his Frenchiness and move to that armpit of Europe that is Monaco.
Just curious, but I wonder how Obama's group of mega rich celebrity friends like Jay-Z, Beyonce, and George Clooney all think of his plans to go after their money...
They will all find the appropriate tax shelters.... It is a game for the mega rich....
I've got no big problem with "the rich". What I have a problem with is the lack of limitations on how rich you can be. Does the world really need 590 ft yachts?, $30,000 a night hotel rooms? $40K bottles of champagne? A $500 cigar? No, no, no, and no say.
All these things exist....while millions go to bed without food each night.
What are the limits to be? I do not know, but surely, having none is not the answer.
I dont have a problem with the rich, I just want a fair level playing field for all. Those who work harder/smarter garner the larger piece of the pie. It's about fairness....
I also do not believe that anyone should tell the "Rich" how much they can gain, provided the riches are generated via a equal level playing field. Those who take the larger risk (capitol) and work hard should be compensated accordingly.
Not a view, but an observation what may happen in the US is taxes on rich will go up. They will just take their money somewhere else.
You have to read - Just the (Tax) Facts, Ma’am - http://rsilberman.com/?p=127 - that shows that regardless of tax rates, the tax dollars collected are about 19% of GDP. Higher or lower rate doesn't change the dollar collected. Only growth of GDP does.
You don't practice defection from France, socialist France defects you.
Bernie looks like a lot of fun.
"Taxes" anywhere in the WORLD have NO detectable effect on Arnault OR LVMH.
LVMH sell ALL the party favors for the rich's ongoing forty-year drunk.They will never SEE a 'down' ANYTHING: month, day, or YEAR. Look up EXACTLY what they sell--and any sympathy you think you might feel for this man will evaporate like water droplets falling onto the surface of the sun.
As long as there are yachts, private jets,limousines,exclusive resorts, private islands, casinos, and expensively-clad bimbos..... and the people who can afford them--arnault's CAPITAL's capital ---- is SAFE.
Dude is UNTOUCHABLE.
"He lives in a world BEYOND your world."
----"Swordfish"