The deterioration in Italy’s debt sustainability will become much clearer next year, as we get more statistical evidence of the calamitous effect of austerity. The effects are already being felt before the 2013 budget kicks in. The tax burden on Italian families almost doubled this month – a result of the introduction of a new property tax system – which has had the immediate effect of killing off the pre-Christmas retail business. Confcommercio, an association of service companies, estimates a consumption fall of 13 percent.
Then we have the French Solution. That’s not working out so great, either:
France’s most famous leading man, Gérard Depardieu, has joined the flight of France’s wealthy to less tax-heavy destinations, establishing his residency in the Belgian border town of Néchin.
A local mayor told French and Belgian media that seeking a respite from high taxes was just one of Depardieu’s reasons for leaving his native country. “He wanted to find a home in Belgium to escape France’s taxes, but he could have also moved to Brussels,” Mayor Daniel Senesael told Belgium’s RTBF television on Sunday. “He wanted to leave Paris, its noisiness, and find a little bit of calm, peace and serenity.” ,,,
His self-imposed exile will make him one of the highest-profile celebrities to ditch France because of the country’s stiff taxes on high earners. French President François Hollande has made good on his campaign promise to tax revenues above €1 million at a rate of 75 percent.
While these two examples are of different tax phenomena — one a wealth tax, the other a superhigh tax on incomes — they both suggest that jacking up taxes in high-tax Europe is a self-defeating proposition. They also provide some real-world reality checks for those suggesting the U.S. has little to fear from dramatically higher taxes.