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Old Money, New Money Flee France and Its Wealth Tax

Denis Payre left for Belgium eight years ago to avoid a tax bill of almost $2.5 million. Taxation in France drives away entrepreneurs like Payre as well as family empires.
Denis Payre left for Belgium eight years ago to avoid a tax bill of almost $2.5 million. Taxation in France drives away entrepreneurs like Payre as well as family empires. (By Molly Moore -- The Washington Post)

"The French Revolution was not about 'equality and fraternity,' as people like saying," said Pierre-Francois Taittinger, the 80-year-old former chief of Champagne Taittinger, one of France's most renowned family businesses, which sold its controlling shares to an American company last year for a reported $1.5 billion. "It was about getting rid of the ruling class. French people don't like the rich -- unless they are soccer players."

Taittinger, who helped create the champagne label that is synonymous with luxury worldwide, said the French tax system not only helped force the sale of his family company but scattered the 38 family members involved in the corporation.

"Half of my family left France because of taxes," said Taittinger, who remained in France and is now mayor of one of Paris's districts. "They now live in England, Belgium and other countries where they were warmly welcomed -- unlike here."

France's opposition Socialist Party leader Francois Hollande said recently that his party's -- and his country's -- opposition to proposals to lower high-income taxes has nothing to do with disdain for the wealthy. "I don't have anything against rich people, as such," Hollande said in a recent political debate. "They have the right to be rich. But I can't accept that the richest can have their taxes lowered."

"This tendency to take from the rich and give to the poor which is supposed to solve all the problems in France is ruining the country," said Alain Marchand, who left France six years ago and now has a London-based consulting business that helps relocate French business leaders and entrepreneurs in England and other countries. "That's an incredibly stupid and narrow-minded vision of economic life."

Eric Pinchet, author of a French tax guide, estimates the wealth tax earns the government about $2.6 billion a year but has cost the country more than $125 billion in capital flight since 1998.

Business organizations and financial consultants say members of the new generation of business school graduates and high-tech entrepreneurs -- who see the tax structure as penalizing not only individuals but also companies' ability to compete -- are especially likely to flee the taxation.

In France, employers are required to pay social security taxes equal to 48 percent of each employee's salary. Labor laws make it difficult and costly to fire incompetent workers. "The way the French state is organized makes it impossible for big family corporations to stay on French soil," said 44-year-old Virginie Taittinger, who moved to Brussels two years ago. "If you add up all the taxes an employer has to pay -- social taxes, employee taxes, the wealth tax, taxes on profit -- even a successful business has a hard time surviving."

The flight has been aided by business-friendly rules of the 25-nation European Union that protect cross-border commerce and by a proliferation of cheap airlines and high-speed trains. Brussels has become a major destination for business emigres, who set up shop in the French-speaking city and frequently visit Paris, which is only 80 minutes away by train.

Suzanne Belgeonne, who heads a Brussels real estate agency, Le Lion, said that in the past decade she has sold dozens of houses to French expatriates in the city's toniest neighborhoods. The sales have risen "significantly" in the past four years, she said, as French buyers help fuel a property boom, especially in exclusive suburban enclaves of luxury villas and broad lawns.

"Rich French people like sticking together in the same neighborhoods," said Belgeonne.

Researcher Corinne Gavard contributed to this report.


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