I’ve mocked France on several occasions, and I thought Sarkozy was so bad that I figured (in the long run) the election of Hollande was a step in the right direction.
But in certain ways, France isn’t as bad as the United States.
The New York Times has a big story about French entrepreneurs and investors looking to escape looming class-warfare tax hikes. Here are a few excerpts
Benoît Pous-Bertran de Balanda, the descendant of a French general who fought for the Americans, is trying to help his wealthy countrymen escape what he calls the tyranny of a new Socialist government primed to severely tax the rich. …Well-heeled French citizens are scouring real estate opportunities in neighboring countries like Britain and Switzerland. The United States — particularly New York and Miami— is also drawing French investors looking to pick up rental properties or pieds-à-terre, brokers say. The French buyers most active in recent months are generally looking at properties between $500,000 and $5 million, brokers say. What the French are so concerned about is Mr. Hollande’s campaign vow to tax income over 1 million euros at a 75 percent rate. …it will also raise the tax rate on capital gains to the same level as the tax on ordinary income.
Normally, this type of story would be an excuse for me to write about the Laffer Curve and the foolishness of penalizing success.
But I want to focus instead on the right to emigrate. Specifically, there are two ways in which France has better policy than the United States.
1. France, like almost every other civilized nation, does not have worldwide taxation. So when French citizens move to Switzerland, Hong Kong, or the United States, they pay tax to those nations. But they’re no longer subject to French taxes on this foreign-source income. Sadly, that is not true for overseas Americans, who are subject to tax in the nations where they live AND the IRS. Their only choice, if they want to escape this punitive and unfair form of double taxation, is to give up U.S. citizenship.
2. But when Americans like Eduardo Saverin decide to surrender their passports, they are hit by punitive exit taxes. This is the type of policy normally associated with some of the world’s most odious regimes, such as Nazi Germany and the Soviet Union. France, I am told, is not perfect in this regard, but the tax treatment of people re-domiciling in another country is not nearly so onerous (especially if they go to another EU nation).
I want good tax policy, like the flat tax, regardless of what’s happening in other nations. But it says a lot (and none of it good) when one of the world’s most statist nations has better policy than America.
International Liberty 
[…] especially true in Europe, where cross-border tax migration is much easier than it is in the United […]
[…] P.P.S. Americans are free to move from one state to another, and the uncompetitive states can’t stop the process. Unfortunately, the IRS has laws that penalize people who want to move to other nations. In this regard, the U.S. is worse than France. […]
[…] P.P.S. Today’s column is about economic-based immigration. There’s also the issue of economic-based emigration. Sadly, the United States policy on allowing people to leave is even worse than France’s system. […]
[…] it is absurd that our tax laws are so onerous (even worse than France in this regard) that some people feel compelled to give up American […]
“I think the reason the US taxes the earnings of American citizens working abroad is that if there’s trouble, the US military will rescue you. Very few other countries can or will do that.”
Uhuh. If there’s trouble in say Canada, the UK, France, or so on, the US military will rescue you. Right.
And if it does, you won’t be charged for the privilege. Right.
That’s definitely worth paying thousands of dollars a year in double taxation for. That’s worth not being able to save tax-free for a pension. That’s worth not being able to bank normally in your country of residence. That’s worth not being able to get a mortgagage.
[…] But it’s especially foolish for state governments to over-tax because it’s relatively easy to move from one state to another. Escaping a high-tax nation, by contrast, is a much costlier step and some governments impose quasi-totalitarian barriers to emigration. […]
[…] for kernels of good news when examining economic policy around the world. I once even managed to find something to praise about French tax policy. And I can assure you that’s not a very easy […]
[…] P.P.P.S. Americans shouldn’t feel superior to France since our tax code is worse in certain ways. […]
[…] We should be embarrassed that our tax system – at least with regard to the treatment of citizens living abroad and the treatment of tax exiles – is worse than what they have in nations such as France. […]
[…] France actually is much better than the United States in that rich people actually are free to move across the border without getting shaken down with exit taxes that are reminiscent of totalitarian […]
[…] I’m ashamed to admit that France has a more pro-liberty policy on tax migration than the United […]
[…] France actually is much better than the United States in that rich people actually are free to move across the border without getting shaken down with exit taxes that are reminiscent of totalitarian […]
[…] P.P.S. In a few areas, France has better policy than the United States. […]
[…] P.P.S. In a few areas, France has better policy than the United States. […]
[…] France actually is much better than the United States in that rich people actually are free to move across the border without getting shaken down with exit taxes that are reminiscent of totalitarian […]
[…] France actually is much better than the United States in that rich people actually are free to move across the border without getting shaken down with exit taxes that are reminiscent of totalitarian […]
I think the reason the US taxes the earnings of American citizens working abroad is that if there’s trouble, the US military will rescue you. Very few other countries can or will do that.
If you renounce your US citizenship, then you’re on your own and you won’t have to pay double taxes.
But you can’t expect to be rescued and not pay taxes to maintain the military systems that would be used to get you out of trouble.
[…] In a few areas, France has better policy than the United States. Rate this:Share this:PrintEmailFacebookTwitterMoredeliciousDiggFarkLinkedInRedditStumbleUponLike […]
[…] (or perhaps I should say disturbingly), even France has a better approach to tax expatriation than the U.S. government. That tells us something about how American policy has veered in the wrong […]
The American government would be better served by eliminating the tax on salaries earned abroad – it’s killing our ability to be globally competitive as it makes us too expensive to employ overseas. We’re the only country that double-taxes our expatriates. America is losing opportunities to influence the global marketplace because too many Americans are passed over for expat assignments with multi-nationals or can’t afford to accept jobs with foreign companies because of the double-tax burden. When will the DC bureaucrats find what’s left of their brains and common sense and start making intelligent business decisions? Perhaps when we get some people with actual business experience and common sense in Washington.
[…] On the Right of Economic Emigration, France Has Better Policy than America « International Liberty. Share this:TwitterRedditFacebookEmailPrintDiggStumbleUponLike this:LikeBe the first to like this. This entry was posted in Uncategorized. Bookmark the permalink. ← Tim Geithner: The Forrest Gump of World Finance « International Liberty […]
[…] elite is not the only area where the French are ahead of the United States. They also have a more dignified way of treating folks who choose to expatriate. And a lower corporate income tax […]
[…] (or perhaps I should say disturbingly), even France has a better approach to tax expatriation than the U.S. government. That tells us something about how American policy has veered in the wrong […]
Wait until these Frenchies find out about the FBAR, FATCA Forms and rules, IRS OVDI practices, the limitations of their new U.S. Person status, the exit taxes should they want to leave again, and they might question the wisdom of choosing New York for their new residence. Saverin made the smarter move.
In practice, this is still a marginal issue in America… for now. But it is an important issue that will come to play a big role in the end days of the once great American empire of freedom.
As a matter of fact, this type of oppressive legislation will become a major force in hastening the decline, and also make it a lot more turbulent at the same time, as I see little desire amongst American people in reversing such policies. Not only that but “The People” seem to be determined to double down on the oppression, as recently reminded by Senator Charles Schumer and the Severin-Facebook debacle.
Once again, I have to remind Americans that they have come to a unique point in their history. A point where more than three billion people have finally, though still only partially, awaken to the very individual freedoms pioneered here in America. While, at the same time, Americans have moved little on individual freedom and actually even seem to have reversed course in the past decade or so. As a result, a grand tipping point is approaching, or has already been crossed, as the once large margin of freedom advantage that Americans have held over the rest of the world for most of their history, has now worn very thin. The tipping point is either very close, or has already been crossed.
But back to the post…
The legislation is important because I suspect that the traitor/exit-tax pitchfork stance enjoys majoritarian support amongst the American people. This, in turn, seems to imply something I have long suspected: That the much touted American love for liberty is more a historical coincidence, and now a fast evaporating momentum from the past, rather than modern rational thought. But serendipity and momentum can only carry you so far. If modern Americans do not renew their vowels with freedom, American prosperity will vanish soon in a vicious cycle of economic distress and HopNChange, once the tipping point is reached. And as three billion competitors in the emerging world are awakening to the productivity of individual freedom, this tipping point is approaching fast, very fast — though, as I said, in my view the tipping point has already been crossed and Americans are now in the beginning stages of the vicious cycle. Otherwise how does one explain that Americans elected Obama to correct Bush’s mistakes, and are now about to re-elect either the current president or his predominantly statist opponent.
The future of the world belongs to the international citizen; economic mercenaries who, in a highly mobile world, will offer their superior ideas and vitality to whichever environment lets them operate freely, contribute their great ideas and products to society, AND keep the reward of their contributions. This mobility and internationalism is an unstoppable reality that cannot be legislated against. In fact, legislating against fundamentals is only a recipe for making things even worse and driving to en explosive end. Hampering adaptation with protectionism only hastens the decline and renders it ever more turbulent. The world is a Darwinian place where cultures and economic environments undergo natural selection. The most productive environments — those that guarantee individual freedom to produce and let individuals keep the rewards — will prevail, whether by democracy, and now seems (unfortunately) by authoritarianism. The voters of western democracies must now decide whether to survive or be sacrificed in this natural selection. The voters of Western Democracies must decide whether they will uphold individualism and prevail, or get the pitchforks out and decline into the dustbin of history. The events of the last five years are clear as to where western world voters are headed towards.
Trying to pre-emptively plug the emigration exits sets the stage for an implosive end to the end days of American empire. Legislating against fundamental and inexorable realities always leads to explosive situations as the rising water of reality can only be sandbagged for so long, now that the safety exits are closed.
The Lings and Guptas of the world are already looking at America with diminished desire (to the temporary myopic satisfaction of American anti-immigration protectionists) as America loses its “Most friendly nation to create businesses and prosper” status. Adding to the current doubts the threat that those who succeed will, in the end, be prosecuted worldwide if they dare disagree with the American people as to what constitutes a “fair share” only brings the tipping point closer. As is typical of such situations, by the time the American people realize their decline and start re-inviting the Lings and Guptas, it will be too late. By then, the pendulum will be swinging in the opposite direction, and the Lings and Guptas will be firmly putting their superior brains and vitality to work overseas, with foreign capital, competing from abroad with superior product against American companies facing an ever increasing burden of regulation and pitchfork economics. Americans will get zero benefit and insurmountable competition from abroad. Military power will provide little benefit as relative loss of military supremacy will inevitably follow loss of economic might – inability to subdue marginal countries such as Afghanistan should be ample warning.
In summary, the only thing that sets America apart from the rest of the world, and has kept it at top prosperity for over one hundred years, is a historically serendipitous resistance to pitchfork economics.
“God has blessed America” if you so believe, but God will soon bless other countries instead, if Americans forget their initial great endowment of individual freedom and its inextricable relation to prosperity.