French Election Campaigns Put Billionaires Under Siege

Experts expect wealthy French people to leave the country if either of the two leading parties wins because of their promise to impose expanded taxes.

It took more than four decades for French billionaires from the Saade family to build a global shipping empire from their stronghold in the southern city of Marseille. France the late founder often kept himself away from the Parisian social elite and the publicity that accompanied politics.

French shipping tax

Shipping companies could face higher taxes if Jordan Bardella becomes prime minister when the far-right National Rally party wins Marine Le Pen by a majority in the upcoming legislative elections.

Bardella doesn’t intend to stop at raising taxes. Despite their fundamental differences, there is at least one issue that both the National Rally and its left-wing rivals in the New Popular Front coalition agree on: taxing the rich. Both parties leading in the polls have promised to reintroduce a broader wealth tax to fill state coffers and help finance expensive spending plans.

If either party wins, wealth managers and financial experts say wealthy French residents could leave the euro zone’s second-largest economy, taking jobs, investment and other tax revenues with them.

“The impact will be very significant,” said Frederic Kraut, president of the French Association of Family Offices, a group of asset managers focused on family-owned businesses. “Family offices are long-term investors who need financial stability.”

Neither CMA CGM nor the Saadeh family have commented on the matter, and there is no indication that the family plans to leave France.

Opposite path for French billionaires

Apart from the Saade family, the list of billionaires includes Bernard Arnault, founder of luxury goods giant LVMH, and Françoise Bettencourt Meyers, heiress to the L’Oreal SA fortune who was First lady their fortune is estimated at $100 billion, and they also own Dassault Defence and Aerospace.

The president spent Emmanuel Macron the past seven years have been spent courting these wealthy individuals to continue their investments and provide job opportunities in the country.

In 2018, a year after he first took office, Macron narrowed the scope of the existing wealth tax to apply to property alone, introduced a flat 30% tax on savings income, and kept in place the controversial so-called “Dutrell Pact,” which could significantly reduce inheritance taxes on family-owned businesses.

The measures, coupled with Macron’s other pro-business reforms, have boosted investment, the government says, and have boosted France’s standing as a business destination. His surprise decision to dissolve parliament has shocked the country and spooked financial markets. A two-round election on June 30 and July 7 could result in the suspension of parliament, heralding three years of instability until the next presidential vote.

Pursuing the wealthy

For the country’s highest earners, the political climate dates back to 1981. Days before François Mitterrand became France’s first post-war Socialist president, he vowed to go after “the very large fortunes invested in property speculation, luxury goods and diamonds,” reflecting a cultural discomfort among many French people with extravagance and displays of wealth.

Once at the Élysée Palace, Mitterrand embarked on a wave of nationalizations that included the Rothschild bank in Paris. He also introduced a wealth tax—or “tax on large fortunes”—an annual tax that at the time applied to those with assets worth more than 3 million francs (€1.2 million in 2023).

Mitterrand’s policies prompted some French people to open bank accounts abroad, sparking what a Senate report later called a “wave of tax exiles”—people who made fortunes and left. Another exodus followed in 2013 and 2014 under Socialist President François Hollande, whose measures included a short-term super-tax of 75% on earnings above €1 million.

French tax changes

Over the 40 years since France’s wealth tax was first introduced, it has been scrapped, reimposed and modified by successive administrations. It has often been the subject of heated debate, especially during election campaigns. This time, the clamor over higher taxes on the wealthy has come from opposition politicians with both extremes calling for “fiscal justice.”

The left-wing coalition of the Socialist Party, France Insoumise, the Greens and the Communist Party has been the most forthcoming with its plans. To offset the costs of higher social spending, they propose passing a new finance law as soon as August 4 that would “eliminate the privileges of billionaires.”

In addition to reintroducing a wealth tax, they plan to replace the flat tax with an exit tax on people who leave the country, raise taxes on high earners and reform inheritance rules to include a cap on inheritance, according to their election manifesto. “It’s about sharing wealth,” said Ian Brossat, a Communist Party senator. “Emmanuel Macron has been a president of the rich.”

Wealth tax in France

For the National Rally, apart from promising to close what he called a “vast tax loophole in the shipping industry,” Bardella pledged to convert Macron’s property wealth tax into a wealth tax on finance that would not apply to a person’s primary residence—one of Le Pen’s promises during the 2022 presidential election, which she lost to Macron.

Bardella did not provide details, but the tax was to include, for example, artworks from the first decade of ownership.

“Emmanuel Macron has given, to the shock of millions of people, huge tax gifts not only to the rich but also to the super-rich, the owners of the enormous wealth of our society at a time when millions of French people are forced to cut back,” Bardella said on CNews on June 18. “My priority and the budget choices I make will always be in favor of the working and middle classes.”

But while Macron has been courting the wealthy, he has also been pushing for jobs, charity and investment.

Billionaires’ contributions

Macron has singled out for urban renewal, and has offered French companies discounts on shipping prices to combat inflation. The CEO has accompanied Macron on numerous foreign trips, and his public profile has been boosted by his outreach to the French media.

In Paris, Olivier Janouray, partner and head of private wealth tax at law firm Arsan, says he has received numerous inquiries from concerned clients since Macron’s announcement on June 9.

“The wealthy will be much more likely to leave France in 2024 than they were in 1981, and many of them have bases in more than one country,” he added.

“Prorogation of parliament would probably mean a postponement of the big tax increases, at least until the presidential election in 2027, which would give people a few years to prepare for that and make their decisions about what they want to do,” January said.