A recent article in the Wall Street Journal–Europe discusses the impact that Obama’s proposed taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. changes would have on Americans living abroad:
Celebrity chef Alain Ducasse insists that his change of citizenship this week from high-tax France to no-income-tax Monaco wasn’t a financial decision but an “affair of the heart.” Right. But even if he’s being sincere, plenty of other Frenchmen have moved abroad to escape their country’s confiscatory taxes.
Americans should be so lucky: Theirs is the only industrialized country that taxes its people even if they live overseas. That hasn’t been a big problem as long as U.S. tax rates have been relatively low. But with Barack Obama promising to lift rates to French-like levels, this taxman-cometh policy could turn Americans into the world’s foremost fiscal prisoners.
And make no mistake, taxes under a President Obama could be truly à la française. The top marginal tax rateThe marginal tax rate is the amount of additional tax paid for every additional dollar earned as income. The average tax rate is the total tax paid divided by total income earned. A 10 percent marginal tax rate means that 10 cents of every next dollar earned would be taken as tax. , including federal, state and local levies, could approach 60% for self-employed New Yorkers and Californians. Not even France’s taxes are that high now that President Nicolas Sarkozy has capped the total that high-earning Frenchmen like Mr. Ducasse can pay in income, social and wealth taxA wealth tax is imposed on an individual’s net wealth, or the market value of their total owned assets minus liabilities. A wealth tax can be narrowly or widely defined, and depending on the definition of wealth, the base for a wealth tax can vary. es at 50% of earnings.