At first reading, I think that this would seem to affect only the wealthy French that establish domicile in Switzerland for tax purposes:
Nonetheless, I would encourage a dialogue here on IBS about the implications.
What would happen if all countries tax their citizens abroad to death? How can we grow wealth in society on both macro and micro scales with all of these punitive regulations? How do we discern between “tax expatriates” and bone fide residents of a country that want to and deserve to pay only the taxes in their country of residence on the income and property they have/receive in such country of residence, without undue influence of their country(-ies) of nationality?
Good for the French! They want to devalue their citizenship and keep up with the Americans. (All the countries are racing to the bottom with their currencies too). The problem rests in the inability to distinguish between those who are “expatriates” and those who leave France to avoid tax (see the video). I doubt that can be done, and those who expatriate in order to sell French products (e.g., wine, cheese) will either have to come home or renounce their citizenship. Everybody, just stay home. Don’t travel! Pretty soon all the desperate countries in the world whose leaders can’t balance their budgets will be doing the same stupid thing.
The spread of citizenship based taxation would be bad news for the world economy. He is using the same pretext for citizenship based taxation, pursuit of tax evaders, as are the Americans.
This will all end badly.
Maybe citizenship based taxation will be like countries trying to acquire nuclear weapons. The countries that already have it won’t want you to get it. But all agree it’s a bad bad thing.
I think that all of us must continue to make efforts to communicate the effects of these policies to our neighbors in the countries in which we live. Many do not believe there is a problem. Because the US policy is incomprehensible and against common sense, many of our neighbors do not believe that there is a problem. I think that we will win this debate in the end, our arguments are solid. DO NOT GIVE UP!
It’s not going to happen…..Sarkozy is behind in the polls and afraid of losing.
The French complain about people leaving and going to Switzerland. The French have to ask themselves this question? How much tax have the Yanks collected with citizenship-based taxation? The answer – not very much. Stick to domestic compliance and if people leave figure out a way to collect the tax and be more tax competitive. The problem is European has maxed out both consumption and income taxes – there no where to go. If the US was smart they would pull the comsumption tax lever, get the revenue coming in, balance the budget and fix its broken down infrastructure and have a bright future – they’ll wait to nearly its too late.
At the end of the day, if people don’t like your tax deal, you can penalise the “one-offs” with an exit tax, but don’t expect the smart, the mobile, and the wealthy in future to join your club. They won’t. Unless you resort to that dirty word of “capital controls” and have people smuggling out diamonds to leave the country.
@all, Sarkozy obviously has not done his homework or he would never have made a proposal like this.
This would be a good way to destroy French exports by making impossible the French citizens who sell them to survive living abroad. He only needs to look at how the US went from nearly 100 years of trade surpluses to 36 years of ever-growing trade deficits from the very first year it implemented this double taxation of US citizens living abroad, so those that always produced those trade surpluses could no loger survive, and headed back home.
I think what we’re seeing is a contraction from “total mobility” that we had for the last 20 years (after the Wall fell). Someone said it here, but I wouldn’t doubt it if jus solis-based citizenship goes to the chopping block in the next few years.
I am sure that this would be as successful as the RTT (35 hour “work” week) has been in reducing unemployment. I love the French and I love France, but they are awfully fond of bad ideas… Did you see last week’s Economist? “Doom, c’est quoi?”
@Jefferson D. Tomas
“What would happen if all countries tax their citizens abroad to death?”
This would happen…
http://isaacbrocksociety.com/2012/02/16/what-is-the-systemic-risk-to-the-worlds-economy/
The world economy would grind to a halt! This would be the ultimate “trade barrier”.