After five years of service from President Nicolas Sarkozy who sought to reduce government controls of the economy and to stimulate private enterprise, French voters tossed him aside last May in favor of a presidential candidate who was nominated jointly by both the French Socialist Party, and France’s “Radical Left Party.” Francois Hollande campaigned with a set of 60 propositions - referred to as his “manifesto” – which included raising taxes on corporations; raising taxes on banks; raising taxes on “rich” individuals; lowering the official retirement age back down to age 60 from 62; hiring 60,000 new government school teachers; and establishing government subsidized “youth jobs programs” in regions of high unemployment.
Today, many French citizens seem horrified that – shock! – President Hollande is doing precisely what he pledged to do. “The situation is very serious” noted Laurence Parisot, head of France’s largest labor union MEDEF in an interview with the London Telegraph last week. “Some business leaders are in a state of quasi-panic” he claimed, as the Telegraph reported that “France is sliding into a grave economic crisis and risks a full-blown ‘hurricane’ as investors flee rocketing tax rates.”
In less than six months, President Hollande has managed to raise capital gains taxes from 34.5% to 62.2%. According to Reporter Ambrose Evans-Pritchard at the London Telegraph, this compares to 21% in Spain, 26.4% in Germany, and 28% in Britain (capital gains taxes reach as high as 35% here in the U.S.).
Mr. Parisot claims that President Hollande has yet to understand the “extreme gravity” of the nation’s “crisis.” Additionally, a private enterprise coalition has launched a nationwide protest movement which they call the “State of Emergency For Business,” claiming that President Hollande’s “confiscatory tax rates” threaten lasting damage to their country.
So let’s be clear about what’s happening in France. A major, national labor union leader (Laurence Parisot) – arguably a counterpart of Teamsters leader James P. Hoffa here in the U.S. – is upset because a Socialist President is taking more money from “the rich” and re-distributing it to others via government employment programs. Such policies would seem like a dream come true for the AFL-CIO, yet the union leader in France seems to understand that the “rich” in his country play a vital role in other people’s livelihoods, and simply seizing more of their money is damaging for everybody. Mr. Parisot takes his criticisms further, stating that “aligning taxes on capital with those on wages is a profound economic error; it is scandalous that the French have been left in such economic ignorance for years” (a stinging indictment on France’s unionized public education system).
So is Atlas “shrugging” in France? When labor union leaders panic over taxes being too high, it suggests that, yes, the trains may soon stop running, in a matter of speaking.
Here in the U.S., it might not be so much of a proactive “shrug” right now as it is a more passive abandonment, a “sitting on the sidelines,” “waiting to see what happens” phenomenon with those who could otherwise be starting new businesses (a subtle “death by a thousand cuts,” perhaps). If he’s re-elected, President Obama will get his “Francois Hollande moment” as he can allow income and capital gains taxes to skyrocket on January 1 (which he has pledged to do) and watch lower and middle income Americans reel from the infliction of Obamacare taxes and penalties.
Let’s hope that Steve Forbes is right – that this is not our “new normal;” that we will reject politicians who are vicious with society’s wealth creators; that we will choose to remain a “free people” – and that we will reject President Obama in November.
Austin Hill is an Author, Consultant, and Host of "Austin Hill's Big World of Small Business," a syndicated talk show about small business ownership and entrepreneurship. He is Co-Author of the new release "The Virtues Of Capitalism: A Moral Case For Free Markets." , Author of "White House Confidential: The Little Book Of Weird Presidential History," and a frequent guest host for Washington, DC's 105.9 WMAL Talk Radio.