Following his defeat of Nicolas Sarkozy in May, President-Elect of France, François Hollande, reiterated his promise to raise the marginal tax rate to 75% on individuals making over a million Euros. While the tax has yet to be voted into law, it is already be affecting French business and, perhaps, French art.
Hollande first proposed the tax in February during the political program Parole de candidat, to the surprise of his budget advisor, Jérôme Cahuzac. The reason for the tax at that time was that it was somehow wrong for individuals to make that much money: “It is not possible to have such high salaries,” Hollande said. French executives, Hollande continued, make “two million Euros a year on average. How can we accept this?”
Now Hollande and his advisors are speaking of the tax as a “temporary” measure in response to France’s budget woes, even if most economists agree that the tax would do little to reduce France’s huge deficit. Moreover, what the administration means by “temporary” is unclear. As Cahuzac put it in a recent interview: “How long does it take for a canon to cool? Some time.”
From the outset, economists and company executives have expressed concern that Hollande’s tax would have a negative effect on France’s economy, not only by incentivizing wealthy individuals to leave the country but by communicating to multinationals that France is not business-friendly.
It turns out, that is exactly what is happening. Both the Telegraph and Le Figaro are reporting that foreign executives and wealthy French are leaving France en masse for London and Switzerland. Even individuals who are far from making a million Euros, are looking to move. As on executive puts it: “You won’t find any foreign executives that are willing to come to Paris.” Another: “Bringing a high-level executive to France has become mission impossible.”
While executives and senior managers are still employed by French firms, and thus continue to contribute to French enterprise, their taxes and personal spending will now go to support governments and economies outside France.
One wonders, furthermore, what the long-term effect will be on culture in France, particularly Paris. France, of course, has a long history of government support of the arts, and Hollande has vowed to continue this support. Yet, government funding of the arts since the late 1950s has not lead to a clear superiority of quality art in France compared with countries such as Germany and the United States whose governmental funding of the arts is distinctly lower. In fact, in France it has led to a glut of part-time artists (intermittents) who receive special unemployment packages to support their work. Many of these intermittents either do little art work or do it poorly, and as Frank Cadenhead reported in 2004, they are more often than not “Receptionist, drivers, hairdressers, even security staff, [who] have been milking the system that has no effective controls nor has adequately defined who is eligible.”
It was in part to correct the abuse of intermittents that Sarkozy attempted (unsuccessfully) to reduce government funding of the arts and introduced tax breaks for charitable giving to increase private support of the arts. Hollande’s government has announced, however, that it will reduce these breaks from 60% to 37.5%. As Martine Robert reports, companies gave 1.9 billion Euros in charitable donations last year, 100 million of which went to Paris’ eight main cultural institutions. These gifts accounted for 15% of the Louvre’s budget and 10% of that of l’Opéra de Paris, but it is widely expected that such donations will be cut in half under Hollande.
Given the unlikelihood that Hollande will increase governmental art funding, combined with the cut in tax breaks for charitable donations and the exodus of wealthy individuals — who even in France disproportionally support the arts and other cultural organizations, such as libraries and educational organizations — art and culture are likely to suffer in France for the foreseeable future.
Could one of the ironies of Hollande’s election be that art and culture will suffer more under the socialist than under the conservative “philistine” Sarkozy?
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