PARIS: France’s 75% ‘supertax’ reduced government tax revenues through hindered economic growth and capital flight. Most memorably, the French supertax famously compelled French actor Gerard Depardieu to become a Russian citizen and relocate to Moscow for tax reasons.
Notwithstanding, this trend of emigration persisted at the macro level as an estimated 2.5 million French citizens now live abroad in the U.K., Belgium and other countries sporting more competitive income tax rates.
As a result of a reduced labor supply and discouraged investment in France following the 75% top marginal income tax rate announced in September 2012, French revenues for 2013 came in at only 16 billion euros, a 14 billion euro shortfall below the French government’s expected 30 billion in tax collections.
Compared to initial estimates from the French government using models which ignore the Laffer Curve’s “slippery slope,” tax revenues from corporate taxes, individual income tax, and value-added tax (VAT) were down by 6.4 billion, 4.9 billion, and 5 billion euros respectively.
