Bayrou Slams Wealth Tax as "Voodoo Economics" Ahead of Confidence Vote

French Prime Minister Francois Bayrou has firmly rejected proposals from some left-leaning parties to impose heavy taxes on the nation's wealthiest individuals, arguing that such measures would not alleviate France's budget deficit but would instead prompt the rich to leave the country. Speaking in the National Assembly ahead of a crucial confidence vote, Bayrou underscored his belief that targeting high-net-worth individuals like Bernard Arnault, the billionaire CEO of luxury conglomerate LVMH, represents a form of "magical thinking" rather than a viable economic strategy.

Bayrou directly addressed the calls to tax figures such as Arnault, who is Europe's richest person and ranks eighth on the Bloomberg Billionaires Index with an estimated net worth of $164 billion. He metaphorically described these targets as "voodoo dolls with needles stuck in them to hurt them and, I imagine, hit them in the wallet." The Prime Minister warned that those targeted by such policies have a very "simple and immediate response: They move," indicating a significant risk of capital flight and loss of economic activity for France.

The Prime Minister's stance comes amid his efforts to rally support for his plan to narrow France’s 2026 budget deficit. His proposal aims to reduce the deficit from an expected 5.4% of economic output this year to 4.6%. To achieve this, Bayrou's strategy involves substantial fiscal adjustments, including €44 billion ($51.6 billion) in spending cuts and tax hikes, though he clearly distinguishes these from punitive taxes solely aimed at the rich. The confidence motion, initiated by Bayrou himself last month to pressure lawmakers, is widely anticipated to result in the collapse of his government.

To bolster his argument against wealth taxation, Bayrou cited several European examples of where the wealthy or their businesses might relocate. He mentioned Luxembourg, Belgium, and the Netherlands as attractive destinations. Furthermore, he highlighted the experience of the United Kingdom, noting that when British authorities decided to tax foreigners who had previously been exempt, the immediate consequence was a significant increase in real estate prices in Milan, implying that wealthy individuals had moved their assets and residences to Italy. This served as a cautionary tale, illustrating the tangible economic impact of policies that disproportionately target the affluent.