France needs it’s new lower tax on wealth in order to stem its exodus of millionaires, the country’s Prime Minister has warned.
Edouard Philippe defended President Emmanuel Macrons’ economic reforms, which have seen thousands take to the street this week, saying they are needed to make France attractive the wealthy again.
Last year alone, 12,000 millionaires emigrated from France – the highest outflux in the world.
Revoir riche: Edouard Philippe defended President Emmanuel Macrons’ new tax break for the wealthiest, saying it is needed stem the increasing flow of the richest leaving France
The annual millionaire’s migration report by New World Wealth found that around 10,000 millionaires left France for other countries in 2015.
Last year, France topped the global list with 12,000 millionaires migrating – some 3,000 ahead of the number two on the list: China.
France’s wealth tax currently applies to personal assets of more than 1.3 million euros, but as of Macron’s new budget, it will only apply to real estate.
Any other forms of wealth, such as shareholdings, will be exempt as of 2018, the government announced this week.
‘When someone leaves the country because of the wealth tax… collectively all French lose,’ Prime Minister Philippe said according to Bloomberg, promising to ‘defend’ the change of the wealth tariff.
Take it and go: France had the highest level of outflux of millionaires in the world in 2016
Mr Philippe has also warned there will be tough choices ahead, saying last month that he was ‘not here to be nice’.
Macron’s new tax laws have caused outrage in some areas of France, with thousands of pensioners taking to the streets to protest new tariffs.
Around eight million pensioners on more than 1,200 euros a month will pay higher social security contributions next year.
Planned cuts to housing subsidies have already sparked a political backlash, with left-wingers complaining that they punish the poorest.
Macron came to power in May promising to make France a more attractive destination for investment, starting his presidency by pushing through reforms to the country’s famously complex labour laws.
Macron’s Socialist predecessor Francois Hollande had already pledged to bring down corporate tax from the current 33.3 percent to 28 percent by 2020.
The new president plans to cut this again to 25 percent by 2022 as he seeks to cast off France’s reputation for being a difficult place to do business.
This comes as US President Donald Trump announced a complete tax overhaul, which he claimed is aimed to help the middle-class – but with some obvious benefits for the wealthiest Americans.
You get one, you get one: Donald Trump has announced a new tax plan, which is set to benefit mostly the wealthiest in America with cuts to business profits and estate tax
Tax experts say several provisions in the plan – including lowering the top personal tax rate to 35 percent from 39.6 percent – make it likely that the wealthiest would enjoy the biggest bounty.
Those provisions include a lower corporate tax rate; favorable rates for business profits used as personal income; and the elimination of the estate tax.
The first $11 million of an estate is exempt for a married couple, meaning that only the wealthiest pay it.
Trump will also abolish the ‘alternative minimum tax,’ which was designed to ensure that the richest Americans pay at least some income tax.
The Trump administration plans to reduce the corporate tax rate to 20 percent from 35 percent, and sharply reduce the taxes paid by businesses whose income is taxed at the owners’ personal rate.
These are known as ‘pass-through’ companies. Many are wealthy partnerships, hedge funds, real estate companies or so-called limited liability companies.
Instead of paying at a top rate of 39.6 percent, they’d be taxed at 25 percent in the Trump plan.