France's Super-Rich Offer to Pay More Tax

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This story is based on a radio interview. Listen to the full interview.

Audio Transcript:

Marco Werman: I am Marco Werman, this is The World. We Americans have had plenty of banking woes and debt concerns lately. Those problems cost the U.S. its vaunted triple-A credit rating. The French government is worried about the same thing happening over there. That's why officials in Paris are rushing through the kind of deficit reduction package that often ties Washington up in knots. It includes the provision that raises millions of dollars by taxing the wealthiest people in France. And you know what? The very wealthy don't mind either. Some of them are offering to contribute more to the State coffers voluntarily. Sophie Pedder is the Paris bureau chief for the Economist magazine. Ms. Pedder, this mirrors the offer by American billionaire Warren Buffett, but Buffett has been a lone voice here in his call for U.S. authorities to raise taxes on ultra-high earners; but that's not the case in France. Tell us about some of these super-rich people who want to pay more taxes.

Sophie Pedder: Well, it started with just a couple of them, but it's now grown to 16 of the leaders or the CEOs of some of France's biggest companies. You're looking at France Telecom, Publicis and even Liliane Bettencourt who is the family biggest shareholder in L'Oreal, the cosmetics firm. And they've all joined a sort of petition saying, "We are willing to make an extra contribution. We realize times are tough, so tax us more."

Werman: How heavily taxed are France's wealthiest citizens? I thought that, generally, the French system was more equitable to all citizens in terms of taxes.

Pedder: Well it is, because France is one of the very few countries, probably anywhere in the world - certainly in Europe, that has what's called a wealth tax. Every year, everybody who is a resident in France has to pay a tax on all their assets - not just their income - but their assets. So you own a house, you own a shutter, you own a racehorse, whatever you might own as a wealthy Frenchman, you have to pay an extra wealth tax every year on that. So they already contribute what I would say is arguably more than anyone else in Europe to the state's finances. But I think it's a moment of symbolism; that's what this is really about. The Prime Minister right now, just this evening, is announcing an austerity plan in France and extra savings in the budget for next year. I think there's a feeling that these guys are trying to say, "We are contributing to that too. Everyone's is going to take some of the pain.

Werman: What exactly are these super-rich folks offering? You say it symbolic, but is it a one-time thing or will it go on for as long as they are making money?

Pedder: Well, I mean, in reality what's happened is that the Prime Minister, this evening, has already announced what the tax is going to be. It's going to be a one-off 3% tax on anybody here who earns more than 500,000 Euros, and that in French terms is a lot. That means you're really touching what the French would call 'the super-rich.' This is what all the CEOs who signed the petition this week are going to accept without any complaint at all. This is something which shows that they're contributing to some of the austerity such as belt-tightening. Because at the same time, the French are now facing tax hikes on things like tobacco, on alcohol, even on fizzy soda, so that there is a feeling that the rich are contributing their bit too; and they are going to do it, apparently, uncomplainingly [laughs].

Werman: Sophie Pedder, Paris bureau chief for the Economist magazine. Thank you very much.

Pedder: You are welcome.