President Francois Hollande of France has announced he will roll back the austerity measures of Nicholas Szarkozy. Among the changes he trumpeted was imposing a 75% tax on the rich. The French government already employs almost 50% of the workforce. That leaves the other 50% to pay the salaries for these government employees. The problem is that the private sector must constantly grow and prosper in order to generate the tax revenue needed to support the massive government bureaucracy. But how can it grow if the government will take three quarters of the money of the wealthy in the nation?
The wealthy through their spending, investments and businesses generate profits that produce business expansion and prosperity. History has shown that high taxes cause the wealthy to move their money to other nations and businesses follow the money. The whole reason for having a business is to make a profit.
Hollande must be very ignorant of history and current problems with nations like Greece, Italy and Spain. Even socialistic Sweden learned the hard way in the 1990s that high taxes drive businesses and investments out of a nation which is why it reversed its economic course.
We face the same problem here in the USA. If Obama keeps spending and raises taxes, he will continue to not only drive businesses out of the US but will cause jobs to go to other nations. From the Mom and Pop stores to the giant corporations, the whole idea is to make profits, expand business with the profits and through prosperity create jobs in the private sector. If our government bureaucracy continues to expand, it will be a major burden on the economy. Government doesn’t create wealth! Wealthy is created by businesses. When the equilibrium between the two tilts more towards the public sector (government) less wealth is created and government revenues fall. It has happened over and over in history but the lesson is ignored.