Saturday, September 8, 2012

Belgium, Here I Come

Hey, I've got nothing against Belgium. Moules-frites, le Manneken pis, insipid beer, language brawls, or proof that life without government is not impossible. But if I were worth €41 billion, I'm not sure I'd want to live there. So has Bernard Arnault been driven into making himself into a Belgian joke by Hollande's promise to tax gazillionaires at a marginal rate of 75%? He denies it. He will keep his French nationality, he says, and remain a "fiscal resident" of France. For Bernard Girard, this is a good thing, indeed, such a good thing that he thinks it ought to be built into EU law. I agree, although I also agree that it might be a tricky law to write.

In general, I think the threat of fiscal self-deportation in response to Hollande's tax policy is overblown, but it gives journalists something to write about. That said, I don't think this symbolic tax is a good idea either. A more comprehensive overhaul of the tax system is what is needed, and this particular approach exposes a large flank to mindless criticism and mock alarm. There are already rumors that the tax is going to be diluted anyway by making it apply to individual rather than household incomes, which opens up a lot of space for creative accounting.

As for Arnault, I've always thought it symbolic of a certain French economic decadence that the country's richest man is the head of LVMH, which stands for Louis Vuitton Moët Hennessy. If you wanted to spell "lap of luxury," you couldn't do better than LVMH (full disclosure: although I don't carry a $4,000 handbag or wear a $750 scarf, I've been known to quaff a glass of VSOP from time to time). Where are the whiz kids writing software or designing cell phones? To be sure, there's always Xavier Niel, who worked his way up from teleporn to telecomms. But there's something depressing about the fact that the biggest moneyman in France is in overpriced luggage. It projects a rather backward image of what is in fact quite a dynamic and diversified economy.

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