Capital flight is happening in France. Taxpayers prefer lower taxes

January 16, 2013 1:55 PM

Campaigners for punitive levels of tax often rest their case on the idea that 'capital flight', the phenomenon of people moving their money away from high tax areas to low tax areas, doesn't happen. Taxes might be higher but those taxpayers will benefit from all the extravagant spending that is paid for with that cash, so runs the argument. But capital flight isn't a 'myth' and people do move both themselves and, especially, their money so that they can pay less tax.

In October and November last year £44 billion more flowed out of France than flowed in, according to data from the Banque de France. The French money supply has also been contracting ever since Francois Hollande was sworn in as president in May. Simon Ward of Henderson Global Investors said:

Taken together, it is clear that there has been a major loss of confidence and funds have been pulling money out of the country.
Capital flight is as real as these numbers, and Gerard Depardieu's recent emigration to Russia is further proof. It's time to kill the myth that people don't react to financial costs.

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