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The left-wing French coalition hoping to introduce 90% tax on rich

Multiple parties are jockeying for position in the aftermath of France’s seismic snap election. The leftist New Popular Front (NPF) insists its ideas should be implemented.

France’s left wing New Popular Front (NPF) - now the largest group in parliament - has called for a prime minister who will implement its ideas including a new wealth tax and petrol price controls.

The leftist alliance secured the most seats in the recent French elections but fell short of the 289 needed for a majority in the National Assembly, France’s lower house of parliament.

President Emmanuel Macron’s Together bloc came in second and Marine Le Pen’s far-right National Rally (RN) party finished third.

France’s parties are now jockeying for position and it’s unclear exactly how things will shake out, but the NPF has insisted it will implement its radical set of ideas.

TheObviousSolution ,
@TheObviousSolution@lemm.ee avatar

The real problem isn’t the income the rich receive, it’s their tax avoidance methods that never show up as any income. This effectively puts a barrier on anyone who isn’t being a scummy shithead from ever reaching their level, it creates a safe harbor for billionaires to laugh from at anyone who ever reaches their level of influence, power, and wealth and might become their competitor if they do not do so in the manner of their oligarchic decades of experience within their inner circle.

This only convinces idiots, and is about as cluelessly meaningless populist legislation as anything fooling far right fascists. Literally ask yourself, who is the rich, because I can guarantee you it will only affect anyone from low to middle income classes who manage to find any wealth without seeking the horde of tax lobbyists true billionaires have.

Case in point, want to know what “rich” is for this piece of legislation? 90% tax on anyone who happens to earn above €400,000 (£337,954) for that year. I doubt this will even affect people earning above €400,000 every year because they have enough wealth and experience with paying the sort of tax advisors that will help orient them into tax avoidance. Billionaires are laughing at this measure.

I would not be surprised if this suggesting could be traced back to “think tanks” coming with this sort of bullshit that only caters and convinces the ignorant while shielding the actually rich. I realize most people will see this as a good thing because they see this as affecting “the rich”, but it really and truly does nothing against the real problem, and I would not even mind it if it wasn’t a sign that nothing will be done about billionaire and corporate tax avoidance schemes and that they are only trying to cater to a sentiment.

BlueMagma ,

Have you seen the word "income"anywhere here ? ISF (Impôt sur la fortune) is tax on wealth, this law would say that if someone is rich we take some of its money. We use to have it in France before Macron removed it. Also the same leftist group is advocating for more funding towards fighting tax evasion amongst the wealthy.

EDIT: my bad the article does talk about income tax, point still stand, NFP still advocate for the ISF

TheObviousSolution ,
@TheObviousSolution@lemm.ee avatar

So basically, it only makes sense when we pull back from the specifics right back into the ideological narrative. Again, the problem is tax avoidance. TAX. AVOIDANCE. Tax evasion is a problem but about as much as a criminal, it is not the norm that needs to be addressed.

BlueMagma ,

What is the difference between tax evasion and tax avoidance ? Genuinely asking, I thought they were the same, might be a language barrier, English is not my native language.

TheObviousSolution , (edited )
@TheObviousSolution@lemm.ee avatar

Tax evasion is illegally trying to avoid taxes. Tax avoidance is making use of legal loopholes to legally not have to pay any taxes. Those companies and billionaires that are responsible for the greatest wealth inequality in the world, they are not amassing that wealth illegally, they make sure the system won’t come after them, either through tax advisors or through tax lobbyists. Usually “tax evaders” are the people who manage to get rich without the experience or the con men who don’t know when to stop like Trump.

BlueMagma ,

I see, in french “Evasion fiscale” refer to both legal and illegal practices, which does create confusion sometimes when talking about it. We have other terms to clarify like “fraude fiscale” and “optimisation fiscale” but evasion is synonymous to both. When french NFP party talks about fighting “evasion fiscale” they mean they plan to fight both. Maybe the distinction got lost in translation.

steeznson ,

Back in the 50s and 60s after WW2 the UK had a 95% tax band for the highest earners. This was due to the country struggling to pay off its debts to the USA after WW2. The Beatles even wrote their song Taxman about it in 1966.

Ultimately there is a problem with these super high taxbands whereby countries that try them will often encounter something called the Laffer Curve whereby overall tax take decreases as the tax rate increases. This isn’t even necessarily tax evasion, all it takes is for wealthy people to be suitably motivated to avoid taxes.

In the UK now if your income breaches £100k then you are paying a higher rate of tax on everything earned over that amount but also you lose the £12.5k tax free allowance that all citizens are entitled to. Overall breaching £100k leads to you paying a marginal rate of tax of 60% even if you don’t earn much over it. Because of this high earning jobs often let you put money into salary sacrifice pension schemes to avoid breaching the £100k mark. It only becomes worthwhile earning over £100k when you reach the region of ~£130k, which is substantially more. Essentially the system encourages tax avoidance by having this cliff which people who are behaving like rational agents will do anything to avoid. If it were less punative then some economists argue that the government would raise more money.

NotMyOldRedditName ,

That’s uh… pretty fucking dumb.

How the fuck did anyone think a cliff like that would be smart.

steeznson , (edited )

It’s especially bad with the recent inflation here causing fiscal drag. People are being dragged into higher tax brackets by their incomes rising in line with inflation (if they are lucky) but the tax bands are remaining at their pre-inflation levels so in real terms we are taxed more while earning less.

I think “the cliff” ended up being introduced in better times when £100k was an extremely good salary. It still is a good salary but it seems like when they introduced the policy they were likely thinking that folks earning it were making so much that it wouldn’t be worth their while to put the effort into avoiding it. However with recent cost of living challenges the demand for avenues to avoid the cliff rose and employers started to respond by offering schemes like the salary sacrifice pension one I mentioned in order to keep their employees happy.

Edit: There are many ways to avoid taxes such as creating your own limited company, paying for your lifestyle as a business expense and then only paying corporation tax on those expenses (currently 20% in the UK). At the same time you draw a “salary” from your own company which is substantially lower than what you would be getting if you include the expenses and then pay income tax for a lower band. The reason most people don’t do this - aside from the obvious moral implications - is that it’s usually more effort than it’s worth for them. At a certain point though, tax avoidance becomes so worthwhile that the temptation is too great for many to ignore.

awesome_lowlander ,

That’s just a bad implementation, then. Tax brackets are progressive for a reason, having a cliff like that should be an obvious no no.

Not to say you don’t have a point, because you do, but the govt could fix that particular issue very easily.

CanadaPlus ,

Shoot whoever wrote that bill. (Metaphorically)

marble ,

You make it sound like a cliff, but you lose £1 of the £12.5k allowance for every £2 over £100k you earn. You don’t suddenly lose the whole allowance at £100,001.

steeznson ,

That’s interesting - I had read it being described as a cliff in various places online where people were discussing personal finances. Double checked now and you are right that it is less of a cliff than I’d thought. Good to know in case I ever get close to that tax bracket!

marble ,

I think you do lose child care benefits or something at that point (I can’t remember, I don’t have kids)

undergroundoverground ,

Oh yeah, those personal finance places all want to talk about the laffer curve, right up until you remind people how high the X value would be. Then, as if by magic, they dont want to talk about them anymore.

To me, those places always seems full of AstroTurfing for the idea of lowering taxes for rich people. There might be some good stuff in there but I would take them main political thrusts made with about as much salt as you can find.

Never ask a man his salary, a woman her age or a neoclassical economist what economic problems tax breaks for the rich won’t fix.

To much money to spend on health care?

Tax breaks for the rich.

To little money to spend on healthcare?

Tax cuts for the rich.

Just the right amount of money to spend on healthcare?

Just the right time to cut taxes for the rich.

bamfic ,

Laffer Curve is junk economics from Ronald Reagan’s propaganda team. Cannot take seriously any argument that relies on it.

bitflag ,

It’s not. If you accept that :

  • Taxing at 0% brings no tax revenue
  • Taxing at 100% also brings no tax revenue

Then you accept that between those two extremes there’s a tax optimum that for a given rate gives the most tax revenue. This is the Laffer curve.

orrk ,

no, it is propaganda. I mean, “Taxing at 100% also brings no tax revenue” is already a stupid statement, and is Tautologically contradictory, even more so in a progressive tax system (please look up what the even means, statistically believing in the Laffer curve also comes with a ton of other misconceptions about financial policy)

also some history to the Laffer curve, it is an unproven theory that basically always get trotted out by the wealthy to argue for lowering taxes, tho it ironically has been shown to have no predictive power whatsoever.

steeznson ,

All economic theories are unproven, approximations about how economists think people might behave. There’s a reason it is often referred to as the ‘dismal science’. Quite often they are based on counterfactuals and projections of what might have happened.

The Laffer Curve is not a rule which always reflects reality but it has explanatory power in certain situations, since logically there has to be a point where avoiding taxes becomes more appealing than paying them.

Regan, et al deploying the theory as part of their political rhetoric - potentially in bad faith - shouldn’t discredit the concept itself because doing so would be throwing the baby out with the bath water. It’s an ad hominen attack against an economic theory; a bit like saying capital controls are always bad because President Xi in China frequently uses them.

orrk ,

ok, so scientifically speaking “proof” is a mathematical concept only, physics doesn’t prove shit, chemistry doesn’t prove shit, no other science proves shit.

But economics, like every other science out there makes models, these models when applied to certain circumstances make predictions, we test these models by testing the predictions they make.

The more accurate the prediction the better and more relevant the model, the issue that economics has is that many people instead of looking at the actual science, take the fictional work and claim it reality, mainly because they believe some propaganda commissioned by really wealthy people, to keep their wealth. the Laffer curve is one such example because it allows rich people to invest into lower taxes and increased privatization.

The Laffer curve isn’t bad because Regan used it, it’s bad because it has a track record of not having any predictive capability.

Also, there exist mechanisms by what we punish tax evasion, taking the likelihood of tax evasion into account for the purpose of setting tax rates is self-defeating, in the assumption that any persons want the maximum amount of money for themselves would always try to evade taxes, no mater what the tax rate is.

steeznson ,

I think we agree about the nature of scientific enquiry, how it is all based on inductive reasoning and cannot provide the certainty of mathematics. Additionally, it looks like we agree that the Laffer Curve has been used to justify bad policy in the past.

However, I don’t think that the theory has been debunked in the way you are describing. There is broadly a difference of opinion between Keynesian economists who are skeptical of the theory and then Supply-Side economists who endorse it; and then a whole spectrum of views in the middle from Behavioural economists or other schools of thought who are more ambivalent.

Academics who do support the view have done empirical studies over the years that they believe suggest that the Laffer Curve is real, see:

  • Romer & Romer, 2007: The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks
  • Mertens & Ravn, 2013: The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States
  • Trabandt & Uhlig, 2009: How Far Are We From The Slippery Slope? The Laffer Curve Revisited

It’s a matter of live debate in the field regardless of your opinion of the theory.

orrk ,

However, I don’t think that the theory has been debunked in the way you are describing

sure, you have listed a few papers, and having skimmed some of them I’m a bit iffy to their relevance mainly as to what numbers they take as indicators what of and at least one had an issue where one of the more prominent indicators they picked is heavily influenced by other outside activity more so than the taxes.

but here’s the thing, if it was just wrong all the time, it would have predictive power, the fact that it sometimes seems to be correct, and other times it being counter to predictions or being mostly non changing means that it’s not a useful model, and a useless model is trash, and honestly I’m highly skeptical of supply side economics, it has produced relatively little in terms of economic stability, nor sustainability.

personally, I’m more inclined towards Post-Keynesian demand side economics, and unlike supply side economics, they have actually made predictive models that actually have predictive power

bitflag ,

“Taxing at 100% also brings no tax revenue” is already a stupid statement, and is Tautologically contradictory

It’s not. If you work 40h per week and can do overtime but that overtime is taxed at 100% (because yes, that’s what marginal rate means, it’s the rate the extra income will be taxed), virtually nobody will bother doing that overtime. The handful who do will probably not clock-in because anyway, there’s no point since it will bring no income after taxation.

orrk ,

you’re not very economically literate, are you? overtime pay is not taxed at the marginal tax rate, that’s not what that is.

the marginal tax rate is the maximum rate your income will end up at, that does not however mean that all your income is taxed at the rate.

as a very simplified example, assume you have the tax brackets

  • $0-$1000 is 10%
  • $1001-$2000 is 20%
  • $2001-$3000 is 30% etc…

and you earn $2500, the taxes you will pay are $1000 at 10% -> $100 the next $1000 at 20% -> $200 and the last $500 will be taxed at 30% -> $150

meaning, in this example, you are paying $450 at a marginal tax rate of 30% on $2500. now overtime can bump you up, for example, imagine you work a LOT over those 40h and earn $3200, now you’re in the next tax bracket due to your earnings.

also, the whole point is to deny all income above a certain level, or do you really think your boss deserves 3000 times your pay? because he certainly isn’t working 3000 times harder than you are.

bitflag ,

Oh please explain to me how marginal rates work… 🙄

If your marginal tax rate is already 30% and you decide to earn an extra $1, that $1 will be taxed at 30% and you get $0.70 in your pocket. That’s what “marginal” means.

Womble ,

Funadmentally it makes sense that tax take is 0 at 0% and low (though not neccessarily 0) at 100%, but in practice it only ever used to advocate for lowering taxes no matter what they are set at currently. You never see people talking about governments being on the left side of the Laffer curve and therfore we should raise taxes.

There’s also no evidence that I’m aware of that the curve is smooth, single peaked or even single valued and it is also likely highly dependent on myriad other factors, in short it’s effectively useless except as a rhetorical device for small-staters to advocate slashing taxes and public services.

CanadaPlus ,

To be clear the 90% tax is an income tax, which is actually not unprecedented as other commenters note. Melenchon has talked about 100% but I guess the other parties negotiated him down.

englislanguage ,

Actually, 90% income tax for the top incomes was common in western countries in the 50s.

damnedfurry ,

On paper, yes, in practice, no.

In the US, at the time that marginal tax rates got that high, the amount of things you could deduct was also MUCH higher. Truth is, nobody ever actually paid 90% back then.

CanadaPlus ,

That sounds like the era. KISS was not a principle appreciated by economic legislators until the later 20th century. Mercantilism died slow.

ssj2marx ,

So the thing about this is that, even if the things wealthy people can deduct means that they rarely pay the 90% marginal tax in practice, the fact that the government is using the tax code to coerce them into doing certain things instead of hoarding their money is still massively beneficial. The current regime abdicates a tremendous degree of the government’s ability to tell the rich what to do with their money, and that is a major contributor to our society’s seeming paralysis with respect to doing things.

CanadaPlus , (edited )

Just 90% has the pro that you’ll actually collect revenue. Nobody’s paying out money that doesn’t reach the intended party even a bit. However, I feel like 100% would be worth it just for the paradigm shift in the way we think about society - that maybe there should be limits to how “special” you can get, and that that’s not spooky communism but simply realism about our mortal condition.

Wanderer , (edited )

Petrol price controls is a terrible idea.

Why not subsidised (free) public transport, more cycle lanes more cycle parking, subsidised electric bikes, mandated EV charging.

BirdyBoogleBop ,

Because motorists hate anything that would help them. Why would you not want a separate bike lane as a motorist? It reduces congestion and gets the cyclist you hate so much off the road at the same time! It’s a win win!

CascadianGiraffe ,

In my experience, people tend to not want things that don’t benefit them directly.

If they don’t use the bike lanes they don’t want them to take up what could be a car lane they would use.

englislanguage ,

Lots of places in France are so remote and sparsely populated that public transport does not work there, at least not yet. It may or may not work once autonomous vehicles are fit for rural areas, but this may take a while.

Wanderer ,

Give them money then. Don’t give them cheap petrol.

maniii ,

Controlling Fossil Fuel prices can prevent other private entities from driving up inflation of commodities. It doesn’t have to be permanent, you could effect a set goal for 6 years, evaluate the results every 6 weeks, and tweak the pricing to prevent inflation/deflation cycles.

While you control the transport costs, you can now plan on how much energy it is consuming to do the logistics. Even setup renewables for the remote regions with medium to large capacity backups ( not just chemical batteries, but pumped storage and other practical solutions ).

You could increase the buffer between different urban zones, commercial, industrial, heavy commercial, dense residential, suburbian.

  • Energy storage densities.
  • Vehicular traffic densities.
  • Public transport frequencies.
  • Private traffic exemption zones.
  • Cycling/Pedestrian infrastructure.
  • Rent-controlled segmentation.
  • Recreational facilities , maintenance and usage.

All of these things can be measured, calculated, even funded by simply controlling the Fossil-fuel prices.

Imagine 10 or 20 stadiums with Extra-Large battery backups, only on game-nights the full bank would see utilization, rest of the time, half or even quarter of the load can be saved up for fluctuations. In emergencies the stadium provides power, safety, shelter and communal support.

So many things can be planned around transportation and logistics. Fossil-fuel literally drives a lot of the traffic. Measure, calculate and control that and you have a reliable method to make sensible common sense decisions. Transparent for all citizens to see the data and the correlation. Accountable for every cent.

miridius ,

Can we get a non Murdoch source on this?

This is not a tax on the rich, it’s a tax on the upper middle class.

naevaTheRat ,
@naevaTheRat@lemmy.dbzer0.com avatar

The… upper middle class…? An income of 400,000 euros? that’s 10x the median income.

What tf is rich then?

96VXb9ktTjFnRi ,

Policies favoring the rich are always sold as favoring the middle class. If middle class means the rich, then upper middle class means the filthy rich.

Don_alForno ,

People who don’t pay income tax in the first place because they are so rich they don’t need a normal income. Those need to be taxed more.

AutistoMephisto ,
@AutistoMephisto@lemmy.world avatar

People who make money by investing. In the USA, the top 1% earn their income through investments, usually the purchase and sale of stocks. These are not taxed the same as regular income because they made the argument that you can’t really tax unrealized gains on investments that are sold, and it takes a while for the gains to actually materialize. Also, they tend to store their money, their liquid assets, in countries with looser tax laws, called tax havens. Much of their net worths are tied up in investments. Businesses, homes, art, classic vehicles, precious metals futures, oil futures, boats, etc.

Assessing the value of all of that is a chore, and they also pay lobbyists to keep the IRS defanged so that they don’t have the resources needed to go after the 1%. And don’t get me started on how much more speculative the stock market has become. Investors buy stocks, not on the expected dividends they’ll receive as a share of the profits of the business, but on their ability to flip the stock and sell it at a higher price to another investor, who is only buying because they anticipate flipping the stock. It’s like if a whole neighborhood of single family homes gets bought up buy a few house flippers, who make renovations, then put the houses up for sale, and sell to new flippers, who are only buying so they can make further renovations, increasing the value of the property again to sell to yet another flipper, ad nauseam.

naevaTheRat ,
@naevaTheRat@lemmy.dbzer0.com avatar

This is France

AutistoMephisto ,
@AutistoMephisto@lemmy.world avatar

Your point? The USA became the model for the western world in many respects after WW2, I would not be surprised if French billionaires make their money the same way American billionaires do.

naevaTheRat ,
@naevaTheRat@lemmy.dbzer0.com avatar

It’s just an extremely usaian thing to do. Mega cringe to see constantly.

400k euro is still like the peak of wealth. Nobody is earning that much reasonably, even if there are even wealthier people doing shenanigans.

miridius ,

Rich is when you have little to no taxable income, and your wealth is mostly unrealised captial gains that you borrow against to fund your lifestyle, and you use various other strategies to offset whatever salary you do get with expenses or make it otherwise untaxable

englislanguage ,

400’000€ yearly income is not middle class. It is roughly the top 1%. Are you maybe mistaking property for income?

I would have preferred taxing on property instead of income, but as long as interests and profits and other benefits are part of income, it sounds reasonable to me.

miridius ,

The rich don’t have income, they take out loans against assets

noevidenz ,

Your instinct to search for a non-Murdoch source is correct, as they are trying to paint the entire NFP as holding the same positions as their most extreme member.

There is little to no chance of Melenchon becoming Prime Minister or having any ability to enact this tax.

However a marginal tax rate of 90% on income over €400k is well above the upper-middle class and would apply to only the wealthiest families, most of whom would still have other avenues to minimise the tax they actually pay.

trolololol ,

I laugh so hard because the headline for me is great news, only now I realized it’s sky news so it’s supposed to be scaring people

ssj2marx ,

I’ll accept this as a compromise between reality and my actual position, 100% expropriation of wealth for every kkkrakkker.

capital ,

Can you expand on what kkkrakkker means?

UnderpantsWeevil ,
@UnderpantsWeevil@lemmy.world avatar

The kkk references an organization common to the American Midwest and Deep South known as the “Klu Klux Klan”, most notorious for its domestic terrorist activities aimed at wealthy and well-organized communities of color following the end of the American Civil War. They were also a powerful political caucus stretching across both major American parties for over a century. Often conceived of as a “secret society” with a certain practices bordering on the occult as part of initiation and promotion, the real influence of the organization tended to boil down to its control of state and local police agencies and prosecuting offices.

A cracker is a stale white salty piece of bread, often served with soup or stew.

capital , (edited )

Gotchya.

For a second there I thought they were using it to say they’d take all of someone’s money based on the color of their skin as well as associating all white people with the KKK.

ssj2marx ,

For the record this is exactly what I mean. Unlimited genocide on the first world.

capital ,

Ah. Just saw the .ml. Good luck with the racism.

ssj2marx ,

Can’t be racist against kkkrakkkers.

capital ,

And here I thought it had something to do with treating people a certain way because of the color of their skin. /shrug.

Call it whatever you want but it’s morally disgusting to treat anyone a particular way due to immutable traits.

match ,
@match@pawb.social avatar

i took pleasure reading that aloud and rolling the k’s

noevidenz ,

This is a bit of a misleading summary.

Melenchon speaks for his own party, France Unbowed (LFI), not the entire NFP alliance.

The NFP as a whole has not declared support for Melenchon’s position, although his party controls 71 (~41%) of NFP’s 180 seats in the National Assembly.

Macron has already indicated that he will not allow Melenchon to become Prime Minister, and the entire NFP will be aware that they must select a more moderate leader to represent them if they expect to gain enough support from the centre to operate as a minority government.

zaphod ,

It’s not just Macron or Ensemble, even within the NFP some parties don’t want Melenchon from what I understand. At least the PS (Parti Socialiste, but they’re actually just social democrats) which has 59 seats and therefore the second most seats in the NFP doesn’t want him to be prime minister.

trolololol ,

Thx stranger, so hard to get news from a single source if you’re not a specialist on the topic

UnderpantsWeevil ,
@UnderpantsWeevil@lemmy.world avatar

Macron has already indicated that he will not allow Melenchon to become Prime Minister

Good news for LePen, I guess.

HawlSera ,

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