Published in Business Spectator (Melbourne), 3 January 2013
To call Gérard Depardieu a French living treasure would be an understatement. The actor, filmmaker and businessman is one of France’s top stars, popular around the world and celebrated for the wide range of characters he has played throughout his career. From Cyrano de Bergerac and The Count of Monte Cristo to comic character Obelix, Depardieu has brought great emotions and great fun to the cinema screen.
There were also big emotions involved when Depardieu recently wrote an open letter to French Prime Minister Jean-Marc Ayrault. But this time, Depardieu’s passion was driven by anger: chagrin at being labelled ‘shabby’ by the prime minister for his decision to leave France for tax reasons.
Depardieu’s case reveals much about the political and economic state of France. It is a country driven by envy, resentment and populism – a country in which even national treasures cannot feel at home any more.
France’s new Socialist president, François Hollande, had campaigned on the introduction of a new 75 per cent income tax rate for incomes above €1 million. What some believed to be an electoral gimmick quickly became policy after the election. Legislation for this super-tax on the super-rich was introduced, triggering an outcry from France’s top-income earners – and Depardieu’s announcement to move across the border to live in Belgium.
If Depardieu had intended not to pay high taxes in the future, he should have chosen a different destination to be sure. Belgium currently taxes incomes above a modest €36,300 at a rate of 53.5 per cent (including a local income tax surcharge), which prior to Hollande’s changes made it the third-highest top income tax rate in Europe after Sweden and Denmark.
So Depardieu could not have made it clearer that he was not unwilling to pay taxes – he just didn’t want to pay Hollande’s excessive rate. Regardless, the French prime minister publicly scolded Depardieu for lacking patriotism, called his move “shabby” and lecturing the film star that “paying a tax is an act of solidarity”.
It was the proverbial straw that broke the camel’s back, and Depardieu responded in writing with a passion that his fans know from his acting.
“Unfortunately, I have nothing more to do here, but I continue to love the French public with whom I shared so many emotions,” he wrote. “I’m leaving because you believe that success, creativity, talent, and actually all difference must be punished.”
He went on to explain that from humble beginnings, he has enjoyed a successful career over which he started companies that now employ over 80 people; that he has paid €145 million in taxes over 45 years; and that in 2012 all his taxes combined equalled 85 per cent of his income.
“Who are you to judge me, so I ask you Monsieur Ayrault, Prime Minister of Monsieur Hollande? I ask you, who are you? Despite my excesses, my appetite and my love life, I am a free being, Sir, and I’ll be polite,” Depardieu finished. He also announced a decision to hand back his French passport and his social security card (which he claimed never to have used).
If it at first sounds hard to believe that Depardieu really paid 85 per cent of his income in tax, it is well possible – despite France’s current top rate of “only” 46.8 per cent – once France’s so-called “Solidarity tax on wealth” (L’impôt de solidarité sur la fortune) and other taxes and charges are taken into account. Increasing the top rate of income tax to 75 per cent would then be likely to take away the remaining 15 per cent of the actor’s earnings that had not yet been claimed by the French state. Little wonder Depardieu is leaving for Belgium.
The nonchalance with which President Hollande has conducted his assault on France’s most successful is astonishing – not least because his proposed new tax is unlikely to yield much revenue. According to French Finance Minister Pierre Moscovici, the government estimates that only an additional €300 million to €500 million will be raised on the new millionaires tax. Even this figure probably assumes that other high-income earners will not follow Depardieu’s example.
With revenues so meagre, the question must be why the French government is so keen on implementing this new tax. Not even the rejection of the tax by France’s Constitutional Council could deter President Hollande from his tax hike. Soon after the country’s highest constitutional authority had rejected the 75 per cent on formal reasons (the Council demanded the tax to be assessed on a household basis rather than for individual taxpayers), the government announced it would reintroduce modified legislation to increase taxes as promised by the president.
A tax that hardly yields any revenue, that is difficult to introduce, drives away the country’s elite, and makes France stand out as a bastion of big government near-socialism hardly qualifies as good policy. The only reason for its existence is the president’s unbridled populism – which may appear ironic considering Monsieur Hollande’s dwindling popularity.
Over the past year, France has moved from former President Nicolas Sarkozy, who promised much and delivered little, to President Hollande, whose only achievement to date is to make his predecessor’s lousy record look better. A poll just revealed that 40 per cent of the French believed that Sarkozy had been more effective than Hollande, and only 22 per cent thought the opposite. Considering Sarkozy’s poor reputation that is quite a feat.
Perhaps Gérard Depardieu mainly left France because he refused to believe that high income earners like him should be allowed to keep at least about half their earnings. He probably also wanted to be better governed. Or maybe he just wanted to live in a country that left him a little more air to breathe as a free man.
That of all countries this happens to be Belgium, which is not known as a libertarian paradise either, is perhaps the strongest verdict anyone could have delivered on Hollande’s France.