There are about 400,000 French citizens living in London and they vote, apparently. François Hollande, the man France’s Socialists hope will unseat president Nicolas Sarkozy in May, took the Eurostar on Wednesday to beg those expatriates for their support, and to drop a hint to the City. “I’m not dangerous,” he said as he stepped off the train at St Pancras station. It was a strange thing to say.
Whether Mr Hollande is dangerous or not is in the eye of the beholder. On a TV talk show on Monday evening, he backed a new 75 per cent tax rate for those earning more than €1m a year. That shocked a lot of Frenchmen, none more so than Mr Hollande’s own top budgetary adviser, Jérôme Cahuzac. Appearing on a different network minutes later, Mr Cahuzac had to admit that the plan was a new one to him. The French are divided on whether Mr Hollande is ahead of the curve or off the rails.
Since the financial crisis of 2008, western electorates have shown themselves eager to claw back the earnings of bankers, speculators and other rich people deemed to have emerged unscathed from the wreck they caused. When politicians accede to these demands, it seems only to whet the public appetite for more. Gordon Brown, as UK prime minister, introduced the 50p top tax rate. Now Nick Clegg, the UK deputy prime minister, wants a mansion tax. Angela Merkel, German chancellor, agreed to a 45 per cent bracket. Now her Social Democrat rivals want to fight the next election on raising it to 49 per cent.
Mr Sarkozy has not been a laggard. He has added a 3 per cent surcharge on incomes over €250,000, and 4 per cent on incomes over €500,000. That is a reform of roughly the magnitude that Barack Obama proposed (unsuccessfully) in the US. But there are signs in France that voters hunger for something yet more radical. Mr Sarkozy has had to give up his “bouclier fiscal”, which capped total tax liability at 50 per cent of income. And Jean-Luc Mélenchon, the presidential candidate of the new Front de Gauche, has run a surprisingly strong campaign, urging confiscation of all income more than 20 times the median. (In other words, a 100 per cent bracket for those earning roughly €360,000 or more.) Mr Mélenchon’s party is nearing double digits, according to some polls.
Yet the sound of these punitive plans is always more pleasing than their sense. People like them less once they’ve reflected on them. Two years ago, in the spring of 2010, a Washington state ballot initiative to impose a heavy income tax on top earners had overwhelming support. It also had the financial backing of many of the rich themselves, including Bill Gates. By the time election day rolled around in November, the public had soured on the measure – fearing perhaps that its taxes would trickle down to more modest earners – and it wound up losing by a 2-to-1 margin. Last week, 60 per cent of British voters told the Independent that they favour Mr Clegg’s plans to tax the rich more in order to remove some of the poor from taxation altogether. But that has done little for the standing of Mr Clegg’s Liberal Democrats.
However well these tax plans may work as narrative, they are ineffective as fiscal policy. The budgetary impact does not match the symbolism. According to France’s ministry of finance, only about 3,000 households would be affected by Mr Hollande’s new bracket, which would raise about €250m. The most forthright defence of the plan was made this week in an interview by Guillaume Duval, editor at the magazine Alternatives économiques: “This measure will raise peanuts,” he says, “and that’s fine.” In Mr Duval’s view, the symbolism is the point. The goal is not balancing the budget but re-orienting the economy and society.
Will backing this super-tax leave Mr Hollande stronger or weaker? So great is the unpopularity of Mr Sarkozy that it would be foolish to bet against a change of government. While the polls have been volatile regarding the outcome of the election’s first round, those that assume a Sarkozy-Hollande meeting in the run-off have not budged. They show Mr Hollande up, at 58-41. Still, until Mr Hollande’s tax plan came out, Mr Sarkozy was easily cast as the oh-there’s-nothing-he-won’t-say candidate. That is why he this week accused the Socialists of “improvisation”, and why Jean-François Copé, the leader of his UMP party, has gleefully called Mr Hollande “Mister 75 Per Cent”.
Mr Sarkozy has worn French people out by governing through big, hard-to-keep promises. His pronouncements on matters from national identity to disposable income came across as either risky or theatrical. Mr Sarkozy’s style of leadership has become a liability. It must hearten him to see Mr Hollande himself beginning to embrace it.
The writer is a senior editor at The Weekly Standard
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