this post was submitted on 10 Jul 2024
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Multiple parties are jockeying for position in the aftermath of France's seismic snap election. The leftist New Popular Front (NPF) insists its ideas should be implemented.

France's left wing New Popular Front (NPF) - now the largest group in parliament - has called for a prime minister who will implement its ideas including a new wealth tax and petrol price controls.

The leftist alliance secured the most seats in the recent French elections but fell short of the 289 needed for a majority in the National Assembly, France's lower house of parliament.

President Emmanuel Macron's Together bloc came in second and Marine Le Pen's far-right National Rally (RN) party finished third.

France's parties are now jockeying for position and it's unclear exactly how things will shake out, but the NPF has insisted it will implement its radical set of ideas.

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[–] ArbitraryValue 4 points 4 months ago (1 children)

The problem with high wealth taxes is the same as the problem with nationalizing privately-owned businesses. Even if you're not worried about the people you tax fleeing the country (maybe they can't because their investments aren't mobile) you still have to worry about the fact that no one would build anything in France (even things not currently taxed) if there was good reason to think that France might suddenly decide to seize a large fraction of its value.

(High income taxes aren't as big a deal because wealthy people can restructure their investments in order to avoid most of them, but I wonder whether the lost economic activity is actually worth more to the country than the money raised by the tax.)

[–] [email protected] 12 points 4 months ago* (last edited 4 months ago) (1 children)

Most people who actually build everything do not have significant enough wealth to be affected. France doesn't need someone with significant wealth in order to build something. France can provide the financial capital. We do know that public investment spurs private investment, but private investment isn't strictly required.

Besides, we've already seen plenty examples of countries where people with significant wealth do not use it to build things in low tax destinations, especially where that low tax results in crumbling infrastructure and unstable labor and political climate.

I wonder whether the lost economic activity is actually worth more to the country than the money raised by the tax.

The answer is "yes" it's worth it. Answering "no" puts you in a race to the bottom which leads to dysfunctional economy and eventually some sort of political upheaval, during which wealth and factories are exceedingly likely to be taken away anyways. See history for references. Also every EUR creates more economic activity at the bottom, than the top. The vast majority of the aggregate demand in richer economies isn't comprised from the top 1%. The aggregate demand is what makes it worth making things and what drives significant private investment. Drive it down and there comes a point where no amount of tax cuts can offset it.

[–] [email protected] 3 points 4 months ago

Yeah, the person you responded to doesn't understand investment. No one makes investments based on taxes. They make investments based on demand.

That's why people build in NYC which has a million taxes and regulations, while tiny island tax havens have little investment beyond tourism. No, Austin is not the next Silicon Valley no matter how many tax breaks they give out. No, Atlanta is not the next Hollywood.