I was discussing the French elections yesterday with some friends. I am not French and don't live in France, and my interest in their elections is mostly just academic and an interest in the leftist parties.
What surprised me was the attitude of most of the people there. There was a lot of talk about "crazy Hollande" who would bring disaster on France and Europe. How his policies of taxing the rich would be great for England, because all the rich would move there. How the GDP of France would plummet once the rich had all left the country.
What is the truth of this?
I know that Roosevelt taxed the rich during the Great Depression, and even proposed a 100% tax rate above a certain figure, only to be bargained down to a tax rate in the 90s. To that, my opponents responded that it was far more difficult back then to move abroad. Now with the EU the rich can flee.
I also remember an interview with Melenchon where he said that the rich would be taxed regardless of where they lived, so it wasn't a problem. He didn't mention any specifics on how that would be done.
So what are the theoretical repercussions of taxing the rich and having many of them "move abroad"? Would it really result in "capital flight" and lower investment back home? Is it as simple as that?