In France, the people maintain the right to distruptively object to government actions and laws. What seems to us to be a criminal act may have (depending on circumstances) more popular legitimacy than the laws themselves. Or it may not, depending.
Also, the USA is in the same spot. Although better as their tax burden is so low, so raising it higher is easier when it comes to the math side of things.
I disagree, a lot of people here are quite aware that we are in very difficult financial situation, from all side of the political spectrum. The main issue is that there is a very big disagreement on how to solve it (i.e how/who to tax more, and where to cut spending). And with a fragmented national assembly, everything is at a deadlock right now.
We don't have issue with the math, we just disagree on what to fund to balance things out.
An example, 200+ billion euros are given yearly to large companies as tax breaks and the like, without the government asking anything in return. The senate had a report about it recently [https://www.publicsenat.fr/actualites/economie/un-cout-annue...].
Another example, the military and defense get a huge increase in budget. schools, hospitals, research, nearly every public service get a budget cut instead [ https://www.force-ouvriere.fr/non-aux-44-milliards-d-economi...].
Man, that must feel like the rug pull of the century for French taxpayers, given that despite these tax breaks, French companies like Airbus and ST are incorporated in the Netherlands and paying(more like, NOT) taxes there instead of France.
I'd be pissed too, and I'd want my money back.
Unless of course the purpose of those tax breaks was actually to keep some jobs in France and not see more of them move to cost efficient places like eastern Europe or north Africa.
If you build/design your products here then you use EU's trained labor, EU's infrastructure, EU's legal system, EU's defense, etc. then you should pay your fair share to support these facilities that help you be a billion dollar corporation.
But I have a hard time understanding how politicians figured that countries with widely varying tax regimes inside an economic union would work out for the countries with a taste for high taxes.
It makes no sense to me. Of course companies are going to choose the most favorable location to incorporate. Counting on companies to be "fair-play" or whatever the politician word-of-the-day is seems completely braindead to me. Unless there were some kind of backroom deals going on, which wouldn't surprise me one bit coming from the EU nomeklatura, and now they're trying to conceal it by blaming "the rich" / "corporate greed".
So the issue is more around transfer pricing, which wasn't really a thing until relatively recently. This has a really, really large impact on services, particularly computer enabled services, whereas in a world where most GDP comes from goods it's not really as big a deal (as you can tax the value-add from a factory much easier than you can from a software sales deal).
Unfortunately, the big corporations put a lot of money into finding ways around whatever law you pass, and the EU are not united on this stuff, at all, at all.
What EU country do you live in?
The only way to make this happen is to work really hard on electing national politicians who will do that, and then change the Treaties to make it possible.
The EU does not currently have these powers, maybe it should?
The left seems to want things we all want, but we're unsure how to afford them. They never seem to have math to back it up as taxes can only go up so much, and they are already some of the highest as a percentage of GDP in the world.
Can you point me to a real proposed solution by either side?
Is this the right metric: "Tax revenue (% of GDP)"?[0]
If so, France ranks 28 at 23.1% of GDP. The highest non-island developed country is Denmark at 31.4%. Denmark's GDP per capita is 1.5x France. New Zeland's GDP per capita is similar to France and their GDP to tax rate is 29.6% which is the fifth highest. Does New Zeland face similar problems as France? I think I agree with your implication that simply increasing the tax to GDP ratio is not a magic bullet.
In general, the data here is really interesting. Germany and the US have a pretty similar value, both averaging at about 11% in recent years. I would have assumed that Germany would have a higher rate. I wonder if this data is misleading somehow or if my assumptions were just wrong here. I guess one variable missing here is government debt, which is not a tax but is still used to pay for government expenses.
[0] Global: https://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS?most_...
France over time: https://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS?most_...
I'm not one to cheer for absurd taxation (which is a French specialty), but I understand why this setup does ruffle some feathers in France.
Speaking as an Irish person, this is definitely true and tax is a big reason for a lot of the multinationals we have here.
However, also note that the Irish people have one the highest debt per capita, basically incurred to pay off debts to EU/UK banks during the financial crisis. If you mutualise debt, and do the capital markets union then you could 100% fix this (but the political will definitely isn't there for that).
[0] Government revenue, percent of GDP - https://www.imf.org/external/datamapper/rev@FPP/
Also relevant: Government expenditure, percent of GDP - https://www.imf.org/external/datamapper/exp@FPP/
Lots of German spending is devolved to the regions, maybe your figures are missing that?
https://www.dieter-suhr.info/files/luxe/Downloads/Suhr_Struc...
https://www.dieter-suhr.info/files/luxe/Downloads/Suhr-Godsc...
The transaction cost approach means that the profit motive isn't a barrier either. If anything, you can make money off of solving the problem. That in itself is probably the ultimate proof that communism is wrong, because it turns communism into a self-hating ideology. Imagine being a communist controlling 1/3 of the world and deciding that you would rather see your "empire" crumble rather than convert the last 2/3 through irresistible persuasion/temptation. Not just that, but you literally start a campaign against the idea of doing so. You'd rather doom yourself than admit being a little bit wrong for even more power.
According to the votes that Le Pen and Melanchon are supposed to get, I would not say "a lot of people".
English people: "oh bother, guess I'll just watch football"
French government: "we are levying a .0053% tax on stinky cheese"
French people: "we are on our way to the capitol with rocket launchers and we will light on fire every speed camera we encounter on our way"
They're like Europe's Portland but without the prevalence of piercings and hair dye. Beautiful really.
Fewer rich people would be my guess.
Fundamentally the French economy isn't producing enough to support the current level of pension spending, due to a continuously falling ratio of workers to retirees.
Of course an influx of immigrants will cause other issues. But if wealthy people need more population to keep their wealth up, I don't think they care.
France overspent in the 2000s and 2010s due to populist politics, and now the chickens have come to roost. Something needs to give in France, otherwise it'll become an Italy 2.0.
It's part of the official discourse.
That's not how things work.
Seriously think through what implementing this would look like. Go through the steps at a high level instead of just adding up 3 numbers and declaring it will never work.
I don't think any government should take over all private wealth. It would be a gross human rights violation and an economic disaster. But this argument against it severely lacks logic and rigor.
I mean, try it with yourself. Imagine that you take your current salary, keep it for 10 years, and have 100% of your spending covered? How life changing would that be to you? Probably a lot.
Understand that the non-wealthy wouldn't get anything new, it would just be a continuance of their current services and benefits. They've have 10 years to increase their GDP by 50% to get the tax revenue to get to a balanced budget. That's simply not happening without obscene inflation, with the corresponding increase in government spending on goods and services, keeping them out of whack.
If your question is "was the Terror awful?", I'm sure you'll have a near totality of french people agreeing with you. If you ask "in retrospect, was the Terror awful enough so that the French nation would have been better off without its Revolution?", then I don't think you'll get many agreement.
The deaths associated with the Terror were plentiful, that's true, but this period was also carefully framed by the bourgeois class who took power afterwards. In terms of deaths, it's around 40k people. The american civil war was 700k deaths. Before Trumpism, would any american say out loud that abolishing slavery wasn't worth it?
I would also be tempted to begin arguing that it might be reasonable to leave out the napoleonic casualties out of the "what good has ever come from getting rid of rich people as a society?" question and I think I could make a case that stands, but I prefer to yield right now :)
Very few countries get out from under totalitarianism without significant bloodshed. The US had its revolution and civil war. The UK had a bunch of civil wars. Germany had _both World War 1 and World War 2_ (it didn't take the first time). You could call the Reign of Terror actually comparatively mild; it only killed about 25,000 people, so far fewer than the comparables.
I do wonder if the fall of the Iron Curtain, which is the big glaring _exception to the rule_, revolution-wise, and also the most recent large-scale example, has misled the younger generations on this.
Income equality is probably more important than wealth equality in terms of quality of life, but wealth inequality isn't nothing.
(Also you have to be a bit careful with wealth inequality figures, as they can be distorted by local practices; for instance in some countries where defined benefit pensions are standard, such a pension, even though clearly valuable, may not be assessed as wealth, and in some countries it may be common to have a long-term/effectively life right to a fixed-cost rental, which again, is wealth-like, but probably not assessed as wealth.)
I think the real question is how to make it work without oil money coming in. Without the constant extra help from foreign countries that money buys. France has some, but not much. Certainly not enough to cover all state expenses and have left over.
The thing is people don't care about how many rich people there are out there, as long as they can get a good life out of their labor (good job, good house, etc) but since capitalism has optimized these out of the reach for most people nowadays, then they start to blame rich people for everything, with the definition of the word 'rich' here being very fluid, ending up to mean just about everyone who has more than they do, and not just your Bezos, Musk and Saudi kings, so any taxes on the "rich" ends up only on the hard working middle class again.
> Clearly they recognise a need for reform because they vote for politicians who run on a reform platform.
Meh. Macron, and his party, was not really running on a reform platform. He was the typical, business centrist candidate.
And the national assembly is very divided right now, and the government is systematically from a minority party (so neither from the left union, or the extreme right RN), which are not running on a reform platform (quite the opposite).
There is proposition about reforming taxes to taxes the wealthiest, something with some popular support, but no party that support this kind of reform as the power to make it happen right now.
We are in a deadlock since the dissolution of the national assembly by Macron, and we probably will be until the next presidential election, or a new dissolution that would give a big majority to one party which would pretty much ensure them control of the government.
The french system is really not made for a fragmented assembly. This is not what you can find in more parliamentary system where coalition form the government. A fragmented national assembly is basically a deadlock in France's fifth republic system.
A naive look tells me if a majority can agree to support a government then it can work, and it not not. What "system setup" helps or hinders a majority made up of different parties? To me it seems the important part is the willingness of parties to compromise. Which may or may not be there regardless of the "system setup".
Mostly because it is a different system. The parlement in France doesn't elect the government. The president choose the prime minister, and the prime minister form the government.
The parlement can, at basically any point, vote to "censor" the government, effectively terminating it if a majority is reached (they do stay in position until a new government is formed, but can only take care of the "affaire courante", i.e simple daily affairs, no big laws, reforms, policy changes, ...).
Indirectly, this means that the parlement can have a lot of power over who will be in the government. If one party has an absolute, or almost absolute, majority in the parlement, it more or less mean that they can decide who shall be in the government.
Due to the way our election works, the party of the president usually has the majority in the parlement. This is even more true since Chirac changed the duration of the presidential mandate to match the duration of the parlement mandate (and their elections are very close). This usually give a lot of power to the president, effectively making him the sole judge of who shall be in the government (since he choose the prime minister and the parlement member of his party follow his lead).
But what we have right now is a very unique situation. Nobody has even close to an absolute majority in the parlement. The left "union" (which is not really united, but that's another story) control roughly ~33% of the seat, the extreme right party control ~21% of the seats, the presidential party control ~15%, and the rest are various centrist and right wing party.
The issue is that there is no way to get a solid absolute majority with this assembly. For the left, even if they were to compromise heavily and add as much center-right as possible in their coalition, it would barely give them a majority, and the government would have to compromise so much, it would piss off all their voters, which would be a political suicide for the next presidential election. Nobody want to ally with the extreme right except a few members of some right party, which would never give a majority (and the RN would only go to the government if they don't have to make any important compromise, for the same reason). So, you have to remove the two biggest block. And so, even if all the other party would somehow make a coalition (which is more or less the government we had since the assembly dissolution), it would still give less than ~45% of seats in the parlement, not enough to ensure that your governement would not be censored (which is what is happening, we've had like 3 or 5 government since the dissolution, i can't even remember all of them).
This is an unprecedented situation in France and basically the achilles heel of the fifth republic. Our system cannot function without a clear majority in the national assembly, and the way the assembly is divided right now makes any majority coalition impossible (or a political suicide).
If the parliament would elect the government, the situation would be exactly as problematic as it is now. I don't see how the fact that the president chooses the prime-minister has any impact on the stability of the system.
You have pointed out a lot of true things, but none of them seems to be a your-system-specific-cause of the current instability.
I don't understand how a 30-30-30 split would work any better if parliament elected the government instead of the president. They would still be unable to reach any agreement, including an agreement on who to put in the government.
French voters need to get it in their head that they need to accept their government tightening belts, otherwise they will have no say on what gets cut.
Somehow the tax rates for top 1% never go up.
Genuine question: what is the effective tax rate on France's top 1%?
It's really impossible to say what's the effective tax rate of these people. Their real wealth is not in the money, of with they have plenty, but rather in endless opportunities.
That's not solvable with tax policy. The solution to that is DEI, but HN froths at the mouth when those 3 letters are pronounced.
Funnily, France already tried that in 1789.
Tax on income is not the problem, it's tax on wealth gained through asset value increase.
Investment income is flat taxed.
And inheritance taxes, which are very high in France.
If you want to increase taxes, consider taxing income more and capital gains at a progressive rate. Although I haven't seen good data on effects of say a 70% capital gain tax, might hurt th,e economy. I did some reading on this subject last month and the sweetspot was around 20% to 35% on that classification of income.
Do you want to take people's wealth and cap it? IE, nobody is allowed more than $5 million? What are you advocating for instead?
For example, how do you tax a private business? In Spain, for example, it is a big carve-out, which leads to people never selling a company, which hurts their economy as you have tons of zombie companies. Or what people do is they take their money and buy apartments and rent them out on Airbnb, wrap them in a business, and get around the wealth tax.
The most effective way to tax wealth is to tax income, capital gains, and inheritance effectively.
But, lets say you can wave a magic wand and tax wealth (France already taxes real estate with a wealth tax + property tax).
What would a 2% yearly wealth tax raise? Maybe 15 to 25 billion a year in France, so it does nothing.
Would this actually cover France's deficit?
And people will just move, or move it around.
France already has a wealth tax on real estate + property taxes.
America's $6.75tn budget [1] would blow through our $140tn private wealth in 21 years. Even Norways $0.11tn budget [2] blows through its $1.6tn of private wealth in 14 years.
Perhaps the better metric is deficit as a fraction of private wealth? If that looks unsustainable, the problem is in publicly-held assets and services.
[1] https://fiscaldata.treasury.gov/americas-finance-guide/feder...
In the last 5 years French public debt has grown $750b [1]
Had that growth in wealth been taxed at the rate income was taxed (45%), that would have seen France's debt decrease - even with the covid mess.
[1] https://www.ceicdata.com/en/indicator/france/national-govern...
You tax income, you tax capital gains, you tax dividends. If you want more money, you increase those taxes.
This is the goal not the problem.
But at some point, people give up, they don't start businesses, and if they do, they form them in the USA. Or they move nearby, a lot of French people went to Belgium the last time taxes increased a lot.
I know that the French economy isn't doing great. And it would likely slide further if government spending slows down, but I'm unsure of the extent of that impact. But I wonder how much of the problem is the sheer volume of paperwork and numerous taxes that consume hours to complete, monitor, and review when you get audited.
I think the government should optimize for a lot of things (well-being, good health, outdoor, fun, no pollution, etc etc), but ultimately, you need money to pay for those things, and to pay for guns to keep Russia (or someone like them) from invading and taking them.
The middle class is disproportionately squeezed.
Also one thing to consider is that most comments here talk about income tax. On top of that you need to also count all other taxes.
Let’s say the company pays a US style salary for you, around 300k from that your actual gross salary will be only 200k from which the taxable salary will be 160k. That 160k is what you will be paying the income tax on (around 40k)
This is the real reason salaries are lower here compared to the US even though the cost of employment is similar.