Francois HollandeIrresponsible government spending is a multi-national interloping cancer that is destroying, without prejudice or concern, every economy that it encounters. Sadly, the growing majority of debt-ridden nations are rejecting "austerity" or, as defined in economics, deficit cutting through spending reductions.
Elections have consequences and are especially meaningful in these times of economic crisis.
In France, the newly elected president, Francois Hollande, promised and is set to deliver on a list of tax increases that include a hefty 75 percent top rate for those who earn more than one million euros annually, an increase from the current 41 percent rate, to address his nation's economic burdens.
The Financial Times reports that French business owners are grumbling. One head of a large company asking for anonymity boiled about the business climate, "Collapsing margins, plunging order books, new extreme pressures on treasuries, uncertainties that put big projects on standby, employment plans frozen and investment projects at best suspended but often completely scrapped." Turning to the promised increase in business taxes, the executive furiously continued, "A catastrophe! It will be much harder to attract good people, and if you find them, they won't want to be based in France."
Hollande and his Socialist majority in Parliament also are advocating imposing a tax on dividends with the intent to "push companies to reinvest profits rather than distribute them to shareholders," according to commentary in Les Echos, the daily financial newspaper in Paris. The paper quoted the leader of one of France's largest companies expressing his anger toward the new tax: "A lot of wealthy people will leave and I am sure the government will end up collecting less than before."
While participating in the G20 Summit in Los Cabos, Mexico, Great Britain's Prime Minister David Cameron needled the new French president at the Group of 20 most influential economies with his admonition, "If the French go ahead with a 75 percent top rate of tax, we will roll out the red carpet and welcome more French businesses to Britain ... "
Among remarks by President Barack Obama at the close of the summit, notably absent were any offering a welcome to the disgruntled leaders of the French business world. So, in the best southern spirit of graciousness, let Tennessee open the door.
Venez a Chattanooga! Come to Chattanooga, Tennessee!