New French Tax Budget Plagued by “Pigeons”

The United States is not the only country where concerned citizens mobilize via the internet to send a loud message to their government. In France, a group of self-identified entrepreneurs known only as “pigeons” took to social networking sites such as Facebook and Twitter in order to protest the 2013 French budget, which would equate their capital gains tax with their salary tax.

Needless to say, raising the capital gains tax is not a popular decision, especially with business owners. According to the Associated Press, 99 percent of businesses in France are either small or medium-sized. Raising taxes on capital gains could easily be seen as a hindrance of business growth in the country and can drive entrepreneurs to look to other countries if they should decide to start their own business.

France does have a reason for this tax increase. To meet their budget for the next year, they would need to raise an additional €30 billion euros. Moreover, despite being one of the largest economies of countries that use the euro, it has failed to grow in almost a year. Meanwhile, unemployment has also been on the rise.

The capital gains tax is not the only tax on revenue that these companies would face, since the French government also charges social taxes. Experts believe that the total tax rate could reach 64 percent, which would obviously put a serious dent in a company’s profits as well as hinder their chance to grow.

After meeting with a group of entrepreneurs, the French government is considering providing concessions to aid these businesses, but other entrepreneurs are claiming that taxation is only one of the many problems plaguing small businesses in France, including strict regulations that they feel serve little or no purpose other than to cause hassle.

Do you think this increase is fair? The United States has a flat capital gains tax rate of 15%, which is often criticized as being too low. Is the best solution somewhere in the middle? Should France do more to encourage start-ups in their own country?

Source: FindLaw

(Despite the original title, the article has nothing to do with Rovio’s “Angry Birds” mobile app. I have chosen not to use such a deceptive title to draw attention to this blog post, even though said deception did work on me…)

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