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French Fashion Tycoon's Threat Shakes Socialist Tax Plan

French tycoon's threat shakes Socialist tax planBy THOMAS ADAMSON

PARIS (AP) - Bernard Arnault - the richest man in Europe - has ignited an uproar in France over taxes, citizenship, patriotism and what policies the government needs to promote growth.

It's a pretty impressive achievement for one little statement.

Arnault - the CEO of French fashion giant LVMH, owner of houses like Louis Vuitton and Christian Dior - is the symbol of France's treasured luxury fashion industry.

So when the face of "Made in France" confirmed Sunday that he had applied for dual citizenship in Belgium it struck deep chord in France's national pride.

Despite his protests, many thought it was an attempt to dodge the new Socialist government's planned 75 percent tax on the country's wealthiest.

One French paper's front-page headline called him a "rich jerk" on Monday and French President Francois Hollande questioned Arnault's patriotism.

But beyond the name-calling, the debacle highlighted a very French contradiction: A country that prides itself on producing exorbitantly-priced luxury fashion has tax policies that target the very people rich enough to buy French goods.

Arnault is the world's fourth-richest man, whose personal fortune Forbes magazine estimates at $41 billion.

His application to Belgium comes as Hollande prepares to implement a 75 percent tax on those that earn more than €1 million ($1.28 million) a year - although it was hinted the plan could be watered down.

"If I was in his shoes I might also think that I don't have a choice and would leave," said 34-year-old Jean-Baptiste Lete, a Paris resident walking in the city Monday.

It wouldn't be the first time that Arnault dodged a Socialist named Francois. He emigrated to the U.S. in 1981 when President Francois Mitterrand swept to power - and returned when the country's tax policies became more conservative.

As a Belgian, Arnault would pay a maximum of 50 percent on his income. More appealingly, he could take advantage of the cherished tax-free status that Belgians hold in Monaco - provided he renounced his French nationality. French nationals living in Monaco are taxed in France.

Arnault vociferously denied that his decision had anything to do with tax evasion and said he will continue paying French taxes, but his comments convinced few.

"I can't believe it," businessman Bernard Tapie was quoted as saying in the Le Parisien paper. "When you're the citizen of a country, you need to know how to enjoy the good part but also accept the downsides. Symbolically, this is a catastrophe."

The move was being called a public relations disaster that highlights the French economy's lack of competitiveness. The French are still reeling over British Prime Minister David Cameron's vow to "roll out the red carpet" for French firms if Hollande followed through on his plan to raise taxes for the wealthy.

Francois Fillon, France's former Conservative prime minister, directly blamed the Socialist government's tax policy.

"This will spread like wildfire. And all over the planet they'll say that France is the country that doesn't like success," he said.

Others placed the blame firmly on Arnault himself. The Liberation newspaper Monday featured a photo of a smug-looking and immaculately suited Arnault holding a suitcase alongside the headline: "Get lost, rich jerk."

On Monday, LVMH issued a statement saying that Arnault will sue the newspaper for "public insult."

Finance Minister Pierre Moscovici was worried about France's global image.

"He is at the helm of luxury houses whose brands are French symbols," the minister told BFM TV. "He didn't realize how it would be perceived, it was sort of irresponsible."

Some critics say the Socialists had it coming, reminding all that Hollande once famously said: "I dislike the rich."

On the other side of the border, the news was greeted with open arms.

"Welcome, Mr. Arnault" read Monday's editorial headline in the Belgian daily La Libre - which claims the billionaire has been living in a suburb of Brussels for several months already.

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commonsenseleft

France is bold enough to make a first big move in the direction all countries must eventually make to balance their budgets. If they don't to lure the wealthy, they risk becoming like the Caymans, a refuge for tax-avoiding scoundrels. If a person is making hundreds of millions a year, how does it hurt him to pay much more in taxes? What can he possibly spend all that money on? By hoarding it and trying to win the "who has the most" game, partly by avoiding taxes, he hurts his country and his fellow countrymen, who must make up the difference, while their economy is being deprived of the spending power of that money. Belgium (or UK) rolling out the red carpet is about the same as our US states fighting each other over relocating businesses by offering taxpayer-funded incentives: it's a zero-sum game, with average taxpayers as the losers and corporations as the winners. The only winners here are the usual suspects -- the wealthy and corporations who control lawmaking to enable them to amass such wealth and then avoid paying a fair share of taxes to the countries who provide (and modernize) the infrastructure that make the amassing of such wealth possible. As Leona Helmsley famously said, "Taxes are for the little people."

September 11 2012 at 5:56 PM Report abuse +1 rate up rate down Reply
davidslesperance

Bernard Arnault is packing a fiscal parachute. If he decides to leap out of the French plane, with a Belgian passport, he will have all the necessary elements to properly leave the French tax system.If France decides to tax based on citizenship (like the US) then he has another passport in place so he will not be stateless. He can also give up his French passport, so that he will only have a Belgian one and thereby properly have left the French tax regime under the France-Belgian tax treaty. With the French tax system in a high likelihood of hitting him hard, this is just smart self-protection. As for French politicians, as Samuel Johnson famously said, "Patriotism is the last refuge of a scoundrel". As for those people who say "good riddance", I would point out to you that a progressive tax system like that of France, the US and the UK has the natural result that the top 1% of tax payers contribute over 30% of the personal tax revenue collected. Therefore, losing a super-contributor like Mr. Arnault would have a huge negative asymmetric impact on tax revenues. Before you call him names (which is not going to inspire him to stay), you may want to think about how you are going to replace the 10s of millions in annual tax revenue he provides.

September 11 2012 at 4:50 PM Report abuse +1 rate up rate down Reply
hrdbal51

Socialism is oppression...it sucks and we must keep it out of America. Vote for free enterprise this election and kick the radical Dems out of office.

September 11 2012 at 7:00 AM Report abuse +1 rate up rate down Reply
Holli, Chaney

In the world of the Internet youi can now live anywhere. People are no longer forced to put up with socialist.
Also his new Country has no Capital Gains tax.

September 11 2012 at 12:07 AM Report abuse rate up rate down Reply
donut999

I worked for and visited often a company in Finland. It is cradle to grave socialism there. 6 or 7 million people. 3% own 95% of the wealth. 23 years ago, a 750 bottle of Smirnoff was $115. A new Honda was $110,000. The government buys everything. The ALKO probably paid 7 bucks for the bottle of Vodka, and the whatever their name is/was probably paid $15,000 for the Honda. As a combo employee/consultant, for this $200 million in sales international company, spent a lot of time with the top folks and Managing Director (ceo here). Their biggest lament "the Finn's will not work". If you were part of the 97%, your life was about the same whether you had a job or just stayed on the dole. We need to be sure we do not go there. Little danger of that, but we also need to have a little compassion. The middle class is fading.

September 10 2012 at 6:26 PM Report abuse +1 rate up rate down Reply
donut999

Where is the story in this story? This has been going on for a 100 years. Why does everyone want to incorporate in Delaware? Why do all commercial and cruise ships register in Bermuda or Panama? This cat is a citizen of the world and probably spends less time in France than 14 other countries. Why do a lot of rich American's move to South America for retirement? Anybody note he is trying to escape 75% by going to 50%? The tax bite, after deductions and push forwards, here is nothing compared to many European and Scandinavian countries.

September 10 2012 at 6:11 PM Report abuse rate up rate down Reply
mrrosco

Gee, what would happen to all our social programs if the top 10 % of wage earners all left the United States. How much would our tax revenue drop ?

September 10 2012 at 5:25 PM Report abuse +1 rate up rate down Reply
jhrooney

Hey Obama, are you Harry Reid and nancy Pelosi listening? I doubt it

September 10 2012 at 5:04 PM Report abuse +3 rate up rate down Reply
jdykbpl45

Another fellow traveler, along with Obama and the Democrat crowd.

September 10 2012 at 4:10 PM Report abuse +1 rate up rate down Reply
richperry05

sounds just like barrys plan------REMEMBER IN NOVEMBER , its our chance to gwet back what obama and his administration have done to america

September 10 2012 at 4:01 PM Report abuse +4 rate up rate down Reply