Tuesday, January 23, 2007

Sarko-economics


UMP candidate Nicolas Sarkozy has outlined a new economic plan, one he hopes will revitalize French growth. So what is he proposing.

1. A 4% cut in individual taxes amd charges, which is 2000 euros/year on average per household.

2. 95% of population will not be charged inheritance tax.

3. Anyone who works more than the set 35 hours will not pay tax on those hours, and their employer won't pay social charges for those hours.

4. On average only one civil servant will be hired for every two that resign. Interestingly, civil servant salaries and pensions cost France a whopping 45% of its annual budget. US entitlement programs make up a majority of the budget too, but that is spread out over the general population.

Sarkozy is hoping that these ideas will be enough to gain him votes and generate some economic stimulus, but not too much to scare voters and cause massive rioting. If he succeeds this will certainly put Royal on the defensive, and pressure her to release her own pragmatic vision of the future. If not, she may have an easier ride than expected.

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2 comments:

L'Amerloque said...

January 24, 2007

Hello !

Unmentioned by the FT – whose article is simply cribbed from an interview in Le Monde - is the fact that M Sarkozy clearly stated that he remains unwilling to exclude one's principal residence from the calculation of the French wealth tax, which currently kicks in at 760,000 euros of assets (say a million US dollars, ballpark).

This is quite important if one is a French property owner with one's fiscal domicile in France – with the recent skyrocketing property values here, owning a "normal" four-room apartment in chic Parisian neighborhood will easily put one over the threshold - and then some. The press abounds with articles concerning retired people with a couple of acres on say, l'Ile de Ré, who are ex-farmers only taking home about 1000 euros per month – but who are subject to the wealth tax (ISF) because those couple of acres have taken on enormous value due to their location.

M Sarkozy might lose quite a few votes over this, in Amerloque's view.

Best,
L'Amerloque

Boz said...

Interesting, thanks for the info! However, considering Sarkozy is already portrayed by the left as helping the rich with tax breaks, a move like this could easily be twisted to be essentially a giveaway to the fortunate. Of course not everyone with $1 mil assests is financially sound, but try telling that to the guy working at McDonalds.

Boz