When we last saw famous French actor Gerard Depardieu in the news, he was moving to Belgium to escape France’s absurdly high proposed 75 percent tax rate on high-income earners. We quipped that the French had nothing to fear, as his house on the border meant that he would still be close by. Well, France, it’s time to worry: your national icon has just been issued a Russian passport and seems poised to flee to the Land of the Tsars. Yesterday the AP reported:
The day after receiving his new Russian passport from President Vladimir Putin, French actor Gerard Depardieu flew Sunday to the provincial town of Saransk, where he was greeted as a local hero and offered an apartment for free.
Depardieu had sought Russian citizenship as part of his battle against a proposed super tax on millionaires in France.
The Frenchman has spent a fair bit of time in Russia in recent years, including for the filming of the French-Russian film “Rasputin,” and he expresses an admiration for Putin. But it is Russia’s flat 13 percent income tax that appears to be the biggest draw at the moment as he flees high taxes in France.
France’s new Socialist government tried to raise the tax on income above (EURO)1 million ($1.3 million) to 75 percent from the current 41 percent. That plan was struck down by the highest court, but Budget Minister Jerome Cahuzac said Sunday that the government is reworking the law so the superrich will still be asked to pay an elevated rate.
Like many countries, France’s tax revenues are not enough to cover public spending, and the Socialist government’s budget for 2013 aims to fix this by doubling down on the blue policies that created the current fiscal bind in the first place. Like California, France favored soaking the rich over cutting spending. Though the 75 percent rate has since been put on hold by France’s highest court, the signal it sent was strong enough to send Mr. Depardieu into self-imposed exile.
What is true for multinational companies is true for rich individuals. Raise the taxes too high, and you risk forcing that source of revenue to flee to another jurisdiction. Countries (and states, for that matter) looking to balance their budgets should take note: As in most things, the right approach is a balanced one.