Gerard Depardieu Just Says No to Supertax | AccountingWEB

Gerard Depardieu Just Says No to Supertax

By Teresa Ambord

UPDATE! On January 3, Russian President Vladimir Putin granted citizenship to Gerard Depardieu, the Kremlin said in a statement. Depardieu said on December 30 that the decision by France's highest court to strike down a 75 percent tax rate on millionaires wouldn't change  his highly publicized decision to move out of France.

UPDATE! Gerard Depardieu's departure from France may have been premature. As December rolled to a close, the harsh "temporary supertax" that French President Francois Hollandee sought to impose on individuals he calls "the rich" was soundly rejected. Hollande is on record stating "I don't like the rich," according to a report in National Review Online, so it makes sense that he would seek to solve a budget problem on the backs of high-earning citizens.

However, France's constitutional court rejected the tax based on technical reasons. Some reports say that the bill was so poorly drafted that it left politicians of all persuasions shaking their heads. Prime Minister Jean-Marc Ayrault shook off the rejection, saying it was "symbolic" and "not very important for balancing finances." France's Finance Prime Minister Pierre Moscovici said they will try again to raise taxes on higher incomes in 2013 and 2014. 

As for Depardieu, will he relent and return to France? Not likely. "That changes nothing," he told reporters. While he probably feels some vindication, the last few months of being targeted by the government for public scorn seems to have him rethinking his loyalty.

In a letter to French Prime Minister Jean-Marc Ayrault, actor Gerard Depardieu said what many may feel in and out of France: "I am leaving because you consider that success, creation, talent, anything different, must be punished." Depardieu is one of France's most productive and beloved actors, having appeared in roughly 200 movies. His healthy income, he believes, has made him a target of France's new "temporary supertax," which, he claims, entitles the government to confiscate about 85 percent of his 2012 income. Citing the prime minister's intention to redistribute wealth to further finance the French welfare system, Depardieu is calling it quits. To escape his country's high taxes, he recently moved, but not far. His new digs are about a mile over the French border in Belgium.
What does France have to say about that?
The government position has been to level intense public criticism at Depardieu as various officials weighed in. The prime minister questioned his patriotism and labeled him "pathetic." He told reporters, "I find this quite shabby . . . all that just to avoid paying tax. Paying a tax is an act of solidarity, a patriotic act." He also asserted that Depardieu is exaggerating the tax rate. Ayrault states the new tax rate is 75 percent on income over 1 million euros (roughly $1.3 million) for French residents who have more than 1.3 million euros in assets. "Going just over the border, I find that fairly pathetic," Ayrault continued. "Being a Frenchman means loving your country and helping it to get back on its feet."
French Labor Minister Michel Sapin said Depardieu is guilty of "personal degeneration." Culture Minister Aurelie Filippetti was "totally scandalized." She was quoted as saying, "French citizenship is an honor, and includes rights and duties, which include the ability to pay taxes." Other government officials described themselves as "shocked" and "saddened." 

Could the same thing happen here? It already has!

Here in the United States, at least one state is seeking to balance its budget by hyper-taxing higher-income individuals. Tax hikes passed in California in November 2012 reach back retroactively to January 2012.

The rate hikes range from 9.3 percent to 10.3 percent for families making $250,000, to 10.3 percent to 13.3 percent for families making at least $1 million annually. This tax hike, which gives Californians the dubious distinction of being among the highest-taxed residents in the United States, is supposed to reduce the current $16 billion budget shortfall to $1.9 billion by the end of fiscal 2013 next summer. But . . . will it?

Columnist Walter E. Williams wrote in the Orange County Register, "California politicians can fleece people in 2012, but there's no guarantee they can do the same in 2013 and later years. People can leave."

In a study by the Manhattan Institute, entitled "The Great California Exodus: A Closer Look," it's estimated that refugees from California have taken their wealth elsewhere in the last decade. Every year for the last ten years, roughly 225,000 residents have moved out of state, for whatever reasons. Along with them, they've taken significant wealth, including: 

  • $5.67 billion to Nevada
  • $4.96 billion to Arizona
  • $4.07 billion to Texas
  • $3.85 billion to Oregon
That study, based on data from the IRS and other federal agencies, argued that "chronic economic adversity, including powerful unions, has driven away business." On the other hand, the California Budget Project, a liberal-leaning think tank, points to another study that concludes high-income Californians – such as Hollywood executives and Silicon Valley entrepreneurs and others – are unlikely to leave because of the tax hikes.

Among famous Californians who have already fled is pro golfer Tiger Woods, who took his wealth to Florida where there is no state income tax. Only time will tell if tax hikes will chase more of the wealthy out of the state.

As for the public, they're divided; however, as taxes continue to rise, they seem to lean away from agreeing with the government position. Two years ago, a poll showed that 50 percent of the public thought the rich should indeed pay more, while a recent poll shows that number has fallen to 30 percent. One blogger posted an article that doesn't exactly fault the actor for leaving, but sees the move more as deserting a sinking ship. He wrote, "Depardieu is all that we, small people, are not. That's why his exile upsets us so. At the end it's not about money, it's about honour. Don't abandon us. France needs you." 
Trifecta of rights violation
Criticism aside, Depardieu accuses the government of violating three significant rights, beginning with property rights. According to him, he paid $190 million in income taxes over forty-five years. He told reporters that in 2012, he is paying 85 percent tax on his income, and that's why he is leaving. 
In addition to accusing the government of confiscatory taxes, he claims that by implementing this tax policy, France is squelching entrepreneurship. Apart from his income as an actor, he has created and invested in restaurants, wine bars, and vineyards. "Eighty people are working thanks to me, in companies that were created for them and are managed by them." But, he told reporters, there's no incentive to take risk and work long hours and invest money if the government takes 85 percent and allows entrepreneurs to keep only 15 percent of their earnings. 
Finally, said Depardieu, "I don't have to justify my choice," claiming that France is attempting to violate his freedom of movement by condemning his choice to leave. In response to government criticism, Depardieu told the French prime minister, "I give you back my passport and my social security that I never used." 
Other voices
The late French economist Frederic Bastiat warned the government of a system wherein "the law takes from some persons what belongs to them, and gives it to the other persons to whom it does not belong." France, where civil servants make up 22 percent of the workforce, has no means to pay its public debt other than what it takes from taxpayers. To pay the workforce and cover its public debt, taxpayers have to remain in France and pay any amount demanded. 
After Depardieu pointed out he wasn't alone in his displeasure with the high tax, Le Parisien, a French newspaper checked it out. Turns out Depardieu is right. Switzerland has become a "country of choice for fiscal refugees," said The Guardian, a British national daily newspaper. Actor Alain Delon, singer Johnny Hallyday, and many sports stars also have taken their wealth over the French border to save taxes. French actresses Brigitte Bardot and Catherine Deneuve have come to Depardieu's defense, asking for an end to "Depardieu bashing." 
He may have his supporters, but just as in the United States, there are also many celebrities who find him despicable for taking his wealth elsewhere. Speaking of Depardieu, singer Michel Sardou said, "I couldn't look myself in the face." And film director Claude Lelouch said Depardieu was lucky to pay high taxes because it showed he was a success: "It means things are going well." 
Lucky? It's a matter of perspective, but Depardieu seems to believe that he should have more to show for his efforts than what he says is 15 percent of his earnings and the knowledge that he is propping up a system he doesn't believe in. 
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