A ways back, I tried to pour water on a front-page Times story that seemed to claim that rich people in California were fleeing the state because of tax hikes on upper-income earners. The story used comments made by pro golfer Phil Mickelson, who suggested (and later apologized for suggesting) that he would leave the state over his increased tax bill, to support its broader trend thesis. But the thesis was undercut by anecdotal evidence further down in the story, which proved what scholars of tax flight have known for years — despite their threats, rich people do not move in any meaningful numbers when their taxes are raised.
Yesterday, the Financial Times put out the French version of that story — titled "Top Executives Join France Exodus" — which claims that French business executives, beset by some of the highest taxes in Europe, are fleeing to London and other financial capitals.
The FT also uses the single case of a high-profile celebrity — in this case, movie actor Gérard Depardieu — as the linchpin of its piece. It also reveals that two wealthy executives from Moët Hennessy are moving from Paris to London. Three's a trend, right?
Except, as Mark Thoma points out, those executives' moves turn out to have been "not because of tax reasons," leaving Depardieu as the sole hoister of the millionaire-tax-flight banner. Quite the exodus! Thoma concludes:
In a population of 65 million we have one confirmed departure, one effort to leave... We see kind of story this again and again: hyperventilating threats from a country's wealthiest citizens that they will depart in droves if they have to pay higher taxes - yet when their bluff is called they fail to act - but still keep on grousing and issuing the threats.
The problem with tax-migration stories is that they often don't have proportion on their side. For every John Paulson considering moving to Puerto Rico, there are hundreds if not thousands of other hedge-fund managers who would never dream of packing up their homes and uprooting their families, just to save some money on tax day.
If millionaire tax migration were going to happen anywhere, France — a country under actual socialist rule, with a government that proposed a 75 percent tax on high-earners and has shown active hostility to business interests — would be the place to observe it.
That the FT can do no better than the Times in proving that rich people actually pack up and move when their taxes are raised should tell us that this phenomenon is much more bark than bite.