Written by Marian Tupy, a policy analyst, Center for the Global Liberty and Prosperity at the Cato Institute. Posted with permission from Cato @ Liberty.
Few Frenchmen are more recognizable at home and abroad than the movie star Gerard Depardieu. Last week, Depardieu caused a great controversy in his native land by moving to Belgium – partly to avoid the 75 percent income tax on the wealthy that was introduced by the socialist President of France, Francois Hollande. Depardieu’s move was condemned by the French political establishment, including the Prime Minister Jean-Marc Ayrault who called the actor’s action “pathetic.”
Depardieu shot back and, in an open letter to Monsieur Ayrault, wrote, “I’m leaving because you think success, creation, talent and anything different should be punished. I am sending you back my passport and social security, which I have never used.” The French actor claims to have “paid 85 percent taxes on his revenues this year  and estimated that he had paid €145m ($189m) in total since he started work as a printer at the age of 14.”
Recently elected socialist French president François Hollande.
While I’m not sure I always buy whole-hog the amorphous concept of “regulatory uncertainty,” brought on by the administrative state, as a catch-all explanation for everything wrong with the private sector and our nation’s current unemployment crisis, a fascinating Bloomberg Businessweek Global Economics feature from May 2012 looks at French labor policy (emphasis mine):
[France] has 2.4 times as many companies with 49 employees as with 50. What difference does one employee make? Plenty, according to the French labor code. Once a company has at least 50 employees inside France, management must create three worker councils, introduce profit sharing, and submit restructuring plans to the councils if the company decides to fire workers for economic reasons.
French businesspeople often skirt these restraints by creating new companies rather than expanding existing ones.
I try to be self aware, so I realize that I have the fiscal version of Tourette’s. Regardless of the question that is asked, I’m tempted to blurt out that the answer is to reduce the burden of government spending.
But sometimes that’s exactly the right prescription, particularly for an economy weighed down by a bloated public sector. And, as you can see from this chart, the French welfare state is enormous.
Only Denmark has a bigger burden of government spending, but at least the Danes are astute enough to compensate with hyper-free market policies in other areas.
So is France also trying to offset the damage of excessive spending with good policy in other areas? Au contraire, President Hollande is compounding the damage with huge class-warfare tax hikes.