Rich Flee France — for Giorgia Meloni’s Italy, No Less

A tense tax tussle is escalating between Paris and Rome as high-earning citoyens flee France for friendlier fiscal climes in Giorgia Meloni’s Italy. The French premier, Francois Bayou, is accusing Signora Meloni of “pursuing a policy of tax dumping,” lamenting what he calls the “nomadism” of those looking to cede less of their income to the government. Yet if Rome is offering more attractive tax rates, what’s stopping Paris from following suit?Feature, after all, the precedent of America, where cross-border squabbling over taxation has long involved high earners pulling up stakes in such confiscatory states as New York and California and resettling in havens like Florida and Texas. The population, and economies, of these Republican low-tax states are surging, along with their electoral strength, while the tax-and-spend Democratic states atrophy.Across the pond, it’s Italy, under Signora Meloni’s center-right coalition government, that resembles the more business-friendly American states. We’re not suggesting that Italy has yet attained to the status of, say, Florida or Texas, neither of which tax their residents’ incomes. Yet Italy has since 2016 been luring “wealthy expats,” per the Financial Times, “through generous tax incentives.” Thousands of French nationals have relocated to Italy, the FT adds.Rome sets for new residents a “flat tax,” the FT notes, of 200,000 euros a year, just doubled last year, “on any foreign income and assets for up to 15 years.” Plus, too, “professionals who have lived abroad for at least two years are only taxed on 50 percent of their income,” the FT reports. In light of these favorable tax provisions, it’s no wonder Signora Meloni avers she was “stunned” by what she describes as Mr. Bayrou’s “utterly baseless criticism.”Quoth Signora Meloni: “The Italian economy is attractive and performing better than others thanks to our nation’s stability and credibility.” She can point, too, to Rome’s improving fiscal prospects, as the budget deficit has dropped by more than half, to 3.3 percent of gross domestic product from 7.2 percent. Meantime, France is flailing, with one of Europe’s largest budget gaps, slated this year to be 5.4 percent of GDP.Mr. Bayrou is irate, as he faces a no-confidence vote over his plan to cut the deficit. While the doughty premier deserves credit for tackling what he calls “the Himalaya” of debt facing La Belle France, his approach leaves room for improvement. Spending cuts and budget austerity are overdue at Paris. Yet the premier, so far, seems to lack a vision for the kind of supply-side measures, like tax cuts, that could help get the French economy moving again. Indeed, Mr. Bayrou is mooting the idea of an unspecified “solidarity contribution” from France’s highest earners as a way to resolve the “national emergency.” Yet Italy’s success in luring away some of France’s wealthiest — along with, per Bloomberg, “rich foreigners from the UK” and “Middle Eastern billionaires” — proves the folly of the Frenchman’s approach. All the more reason, then, for Mr. Bayrou to embrace Signora Meloni’s savvy on taxes.

Rich Flee France — for Giorgia Meloni’s Italy, No Less

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