French high earners are exploring ways to move their money out of the country over fears that a new left-wing government could impose a 90 per cent tax rate and confiscate any inheritances worth more than €12 million.
Their concerns will have been assuaged, for the moment at least, by an announcement on Monday from the hard-left France Unbowed party that it was breaking off talks on forming a government with the other three parties in the New Popular Front (NPF) alliance, amid squabbles over choosing a new prime minister.
Nevertheless, many well-off French people are alarmed enough to be talking to tax lawyers about taking their money abroad, according to Le Figaro, the right-wing newspaper.
“We’re getting 25 to 30 per cent more calls,” Philippe Lorentz, of the August Debouzy law firm, said.
Similar policies by previous left-wing governments led to tax exoduses, most recently in 2012 when François Hollande became president promising a 75 per cent tax rate on earnings above €1 million a year.
President Macron’s corporate tax cuts and pro-business reforms are unpopular with many voters but they have attracted foreign capital and helped to bring down unemployment to a four-decade low.
Some French taxpayers have been spooked by a threat from the France Unbowed, the biggest party in the NPF coalition, to impose a 100 per cent tax on large inheritances.
“Above €12 million, I take the lot,” Jean-Luc Mélenchon, France Unbowed’s leader and a former Trotskyist, has said.
Éric Gérard of Optigestion, a wealth management company, said: “My clients with assets over €12 million are refusing to let themselves be fleeced.”
Macron’s decision to call snap parliamentary elections plunged France into a political crisis as it prepares to host the Olympics.
Tradition dictates that the NPF, as the largest parliamentary group, should be asked to form a new government but the centre-left Socialists and more radical parties in the alliance have so far failed to agree on who should be prime minister.
France Unbowed formed the New Popular Front with the moderate Socialists, the Greens and the Communists. It accused the Socialists of blocking agreement on a non-Socialist candidate, but the hard-left party has itself rejected candidates proposed by other parties. Supporters of Mélenchon want him to be prime minister, but he is a divisive figure whose revolutionary rhetoric has alienated the centre-left.
Macron has reappointed Gabriel Attal, the outgoing centrist prime minister, as a caretaker in the interim.
The president may be hoping that the NPF, a disparate group of parties cobbled together shortly before the election, will soon break up.
That could leave the way open for him to appoint a moderate prime minister at the head of a coalition government that would exclude both the hard left and the hard right.
Foreign investors appear more sanguine than many of France’s wealthiest people.
Initially, investors panicked when Macron called the elections but many now see the political gridlock as the least-worst outcome. The prospect of a parliament too divided to introduce radical policy changes has calmed the markets.
The political crisis could trigger a brain drain, however.
According to Le Figaro, those considering leaving also include middle and senior managers of technology and finance companies.
It is not only the prospect of a heavier tax burden that is alarming them.
“It’s a sum of problems. Our clients are worried about the direction society is taking, economic instability and the future of their savings,” Lorentz said.
France Unbowed’s manifesto calls for the reversal of Macron’s pro-business economic reforms, a 90 per cent tax rate on incomes above €400,000 a year, a shift of the retirement age back to 60 from 64, price controls on goods defined as “staples”, a 14 per cent rise in the minimum wage, and public— spending commitments of at least €150 billion over three years.
