World Economy

More French Millionaires Flee Abroad to Escape High Tax

More French Millionaires Flee Abroad to Escape High TaxMore French Millionaires Flee Abroad to Escape High Tax

New figures published this week suggest that an increasing number of France’s top earners are leaving the country, with some observers blaming high taxes for the rising “wealth drain”.

A total of 3,744 people who earned €100,000 per year or more left France in 2013, a 40% increase compared to 2012, French financial newspaper Les Echos revealed citing figures from the national tax-collecting office, AFP reported.

Furthermore, 659 people who earned €300,000 or more annually said ‘au revoir’ in 2013, a 46% rise on the previous year. By comparison, the overall French migration rate in 2013 increased by only 6%.

The French newspaper highlighted that the figures were incomplete due to various bureaucratic issues, and warned that it would be dangerous to use it to draw any conclusions. However, the article coincided with the recent publication of a report from the New World Wealth consulting group that listed France third on a list of countries with the biggest outflow of millionaires. Around 42,000 millionaires left France between 2000 and 2014, according to the report.

Both reports have raised eyebrows at a time when France is still trying to claw its way out of an economic slump and reduce its worryingly high unemployment rate.

Targeting Millionaires

Some observers have cited the France’s relatively high tax rate as one of the main reasons rich people are jumping ship in record numbers. Taxes and social security contributions accounted for 45% of GDP in 2013, the second highest rate among the OECD group of rich nations, according to a report last year. Only Denmark, with a tax rate of 48.6% of GDP, topped France.

Prime Minister David Cameron angered many in France back in June 2012 when he said Britain would “roll out the red carpet” to welcome wealthy French citizens and firms overburdened by the country’s taxes.

The conservative British prime minister was responding to questions over a proposed measure by President Francois Hollande, a Socialist, to tax incomes over €1 million at a 75% rate. Hollande’s infamous millionaires’ tax, a key campaign promise meant to cut public debt, was eventually struck down by France’s Constitutional Council.

Another uniquely-French levy, the solidarity tax on wealth (Impot de solidarite sur la fortune, or ISF) is also viewed as an attack on France’s wealthy. Introduced by the Socialist Party in 1981, it is an annual direct tax on French residents earning an excess of €1.3 million per year.

French cinema star Gerard Depardieu garnered widespread media attention in 2012 when he decamped to Belgium in search of less tax-heavy regime. The movie star was accused of “pathetic” and unpatriotic behavior by leading politicians at the time, prompting an angry letter from the actor in which he accused the French government of punishing “success” and “talent”.

Depardieu’s self-imposed tax exile has since faded from the public’s attention, but the flight of France’s wealthy–real or perceived–remains a concern for Hollande’s already troubled government.