(originally written Apr 19, 2012. Part of my Great Upload of 2013.)
The American “millionaire tax” plan
At the moment, Obama is facing stiff resistance from his proposal to tax all income above $1,000,000 per year at a rate of 30%. This, despite the support of one-time world’s-richest-man Warren Buffett, who wondered in a NY Times editorial last year why he, a billionaire, paid a lower tax rate than his secretary.
(Answer: most of Buffett’s income comes in the form of capital gains taxed at 15%, which is lower than income tax rates paid by all but the lowest-paid labourers. A similar situation exists in Canada — capital gains are taxed at half the rate of actual work.)
The French “millionaire tax” plan
As has become the regrettable pattern, Obama’s proposal sounds nice on the surface, but pales in comparison to others being bandied about. A French economist suggested his country raise the top rate from 40% to 60%; and, not to be outdone, Francois Hollande, the leader of France’s Socialist Party, proposed 75%. :) And get this — with the election imminent, Hollande is topping the polls!!
Of such things, the new leader of Canada’s NDP, Thomas Mulcair, can only dream. ;)
France being France, it wouldn’t be unprecedented for Hollande to win the election and runoff. In 1988, the year after Reagan gave his famous “tear down this wall” speech in Berlin, and with Glasnost and Perestroika in full effect in the Soviet Union, France re-elected a Socialist as President. Yessir, the French rabble takes marching orders from nobody. :)
In May 1968, student protests there went viral and culminated in a general strike by two-thirds of the working population, causing President de Gaulle to flee the country, fearing revolution. (Not an unreasonable fear; in the prior two centuries, the country had gone through four revolutions and two empires, and was on its fifth republic. They even found the time to restore the monarchy once!)
In the snap election a few weeks later, in a display of that characteristic French je ne sais quoi, voters gave de Gaulle a landslide majority, having decided that he was actually better than the alternative, after all. (When they say a week is a long time in politics, kids, this is exactly what they mean!)
Millionaire surtaxes in general…
In broad terms, surtaxes on the very highest incomes tend to be difficult to implement, because the 0.001% who live in “Richistan” tend to move between countries in a game of tax whack-a-mole. Aiming at the top 0.1% or even 1% is probably more productive, as they’d be more likely to look for tax loopholes, than move to the Cayman Islands. And that at least creates jobs for accountants and lawyers. Plus, there’s more of them. ;)
This makes me wonder if, for all the global advantages English brings us internationally, it becomes a disadvantage, here: Canadians can move to most parts of the US without suffering much culture shock. Britain and Australia would be bigger cultural leap, but most of us would still have “home-language advantage”.
For the uberrich Swede, Norwegian, German or French person to emigrate to a lower-tax zone though, they’d have to leave their social circles, adapt to a new culture, and manage day-to-day in a different language. And if they wanted to stay close to home, their selection would mostly be limited to countries they’ve historically invaded, or countries which have invaded them. (It’s awesome, the kinds of elaborate theories you can come up with, when you don’t bother to back them up with data! But in this case the Wall Street Journal provides some cover for the idea that even if the well-off say they’ll leave, they usually don’t. Reminds me of a certain someone at work, actually… ;) )
On this side of the pond, no one really raises a fuss about our cousins’ invasions (1775, 1812) or the fact that we burnt their White House in revenge (1814). So for well-off Canadians, border-hopping mainly means cheaper home, gas, dairy, phone, TV and internet costs. ;) That, and having to put up with heathens who don’t know that some words aren’t meant to be pronounced “abowt”. ;)