Is it a coincidence that it was the French economist
Frédéric Bastiat who wrote:
"L'Etat c'est la grande fiction par laquelle
tout le monde s'efforce de vivre aux dépens de tous les
autres." (The state is the big illusion on which everybody
tries to live at everybody else's expense.)
The illusion lies in the fact that government does not create
anything and can at best only distribute wealth (minus
administration costs). Usually the wealthy win at the expense of
the poor: while the rich might pay higher income tax rates, they
receive corporate subsidies, protective legislations and have more
means to avoid taxes too. Yet the masses only see what is directly
visible, thinking that taxing the rich can solve their problems.
Such blindness inspired Bastiat to write his famous broken window
When a window is broken, it creates job opportunities for a
window repairman, who'll have more income to spend on the baker
and so on. But had the window not been broken, money that would
otherwise be needed to repair a window would now be spent and
create job opportunities elsewhere. The economy just lost a window.
But those are unseen economic effects. It is the economic blindness
of the average voter that leads to destructive government programs
such as cash for clunkers (governments destroying second hand
cars), but also to self destructive tax policies.
Tax money can stimulate the economy, but it would stimulate it
more if it were left in the hands of the businessmen and the
consumers. Trying to stimulate with tax money is like Baron Von
Münchhausen dragging himself out of the swamp by his hair: it
cannot be done.
In the United States, president Obama wants to raise taxes,
because he believes it would be a more fair system. The new French
president Francois Hollande seeks to increase the highest income
tax rate to 75%, but his justification is more extreme: during his
election campaign he told the public: "Above 1 million
euros, the tax rate should be 75% because it's not possible to
have that level of income."
Really he said it: "I will not accept such indecent
First lets analyse Obama's claim that taxing the rich higher
is fairer. The average French worker earns €30,000 per
year. France income tax rates are as followed:
Up to €5,963 0%
Between €5,964 – €11,896 5.5%
Between €11,897 – €26,420 14%
Between €26,421 – €70,830 30%
Between €70,830 – €250,000 41%
Between €250,000 – €500,000
Between €500,000 – €1,000,000
Above €1,000,000 75%
The average French worker, assuming he does not use any
deductions available to him, pays €3433 income tax per
year. A French top earner making €250,000 per year pays
€89,142 income tax, almost 26 times as much. A wealthy
Frenchman making €1.5 million per year would pay
€799,142, more than 232 times as much tax as the average
French worker. By what standard can that be called fair?
Hollande's intend, however, is to tax everybody making over
€1 million one hunderd percent. But even with 75% he will
soon have his way: No self respecting rich person will allow such
We invite you to share your opinion in our comment section.
Also see in this context this interview with actor Will Smith on French
television. Smith is a strong supporter of (the tax policies of)
president Obama. But what does he think of 75% tax?
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