Will French president's new tax laws discourage people from moving to France from the USA?

As French President François Hollande continues to push forward with his new tax plan to, essentially, raise taxes for high income earners, there has been a fervent opposition coming from the start up community who are saying that the new bill will further discourage entrepreneurs from moving to France from the USA and will ultimately prevent young innovators from even ever considering France as a long term destination.

The start up group, locally referred to as “pigeons,” has long felt the restrictions imposed by France and bemoaned the difficulties of starting a business there in comparison to the US. Capital gains taxes are substantially greater in “pays des droits de l’homme” (which means country of the human rights, a nickname for France) and tax laws there are historically slanted to favor the larger companies.

A direct quote regarding the complaint aptly describes the position of future potential start up entrepreneurs: “They are protesting against aspects of Hollande’s tough crisis budget for 2013 which, they say, are unfairly skewed against the small business sector and would kill the start up boom, forcing young digital innovators to flee France. They argue that a €2bn (£1.6bn) increase in capital gains taxes on equity sales would force entrepreneurs who sell their new companies to pay up to 58% to the state, discouraging them from getting new ideas off the ground in the first place.”

It appears that this issue will go straight to the heart of the long held debate of the pros and cons of one of the basic financial tenets of the USA vs. France. Since the beginning of the hi-tech era there has been speculation and, some would say, out and out resentment from the global financial community about the US’s seeming overwhelmingly dominant position as the preferred start up destination of the world as opposed to some of the other financial heavyweights around the globe, such as France.

Hopefully Hollande’s new tax laws will strike an extremely sensitive chord amongst the financial leaders of France and will force them to take the needs and desires of future start ups into account. You can only take away so many local incentives to start a business somewhere before the field of prospective innovators begins to dwindle and they decide to pursue their dreams elsewhere.

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