Rolling Back a Tax Increase via Facebook

http://www.nytimes.com/2012/10/13/world/europe/13iht-letter13.html

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PARIS — In a matter of days, a nimble group of entrepreneurs, most of them in the information technology business, managed something that slogan-chanting street demonstrations rarely achieve: They got the French government to roll back parts of an unpopular tax measure that they considered fatal to their start-up businesses.

Now known as “les pigeons,” a French slang word they adopted because they don’t want to be the government’s “fall guys,” the two-week-old group also managed to galvanize French big business into an alliance of bosses and pigeons, which issued a joint statement last Tuesday calling on the government to retreat further.

So how did a group of irreverent Internet “start-uppeurs” (a bit of Franglais that has cropped up in French techie vocabulary), who run companies with very un-French names like Kwarter, Whoozer, Ebuzzing, Kelkoo and Meetic, some very successfully, manage to bestir both France’s political class and its boardrooms?

All it took was a Facebook page, introduced Sept. 28, which followed the publication the same day of an opinion piece in La Tribune, a French business newspaper, by Jean-David Chamboredon, 49, veteran investor in French I.T. start-ups, who has now become the pigeons’ spokesman.

But it was the Internet that did the trick. Within 15 days, about 67,000 followers had “liked” the pigeons’ Facebook page and were busy sharing it all over the globe, including among the many French entrepreneurs who have taken up residence elsewhere, 500 in California alone.

“This thing has taken on a scale that I could never have imagined,” said Mr. Chamboredon, a graduate of the prestigious École Polytechnique who did a three-year stint in Silicon Valley and is now president of ISAI, an investment fund he founded two and a half years ago that employs 200 people.

In an interview at the company’s modest offices on the ground floor of a courtyard one block from the Arc de Triomphe, Mr. Chamboredon, true to the style of a start-uppeur, rushed across the courtyard to open the office himself, appearing tieless, in a casual jacket.

This is a far cry from the polished veneer of the French business elite, which is precisely why, in Mr. Chamboredon’s view, the French public — traditionally suspicious of business — has looked kindly on the pigeons.

“When the French see a little start-up boss who pays himself the minimum wage, eats pasta and doesn’t know if he has enough cash to finish the quarter, they don’t see him as a ‘grand patron’ — he’s not the capitalist,” he said.

What set off the protest was a proposed change in the capital gains tax, which would increase it from roughly 34.5 percent, including 15.5 percent for social charges, on a sliding scale, to a maximum of 63.5 percent for high-end investors who cash out within two years. It is the byproduct of President François Hollande’s campaign pledge as the Socialist Party’s candidate to bring taxes on capital in line with France’s progressive income tax.

With the French economy now at a standstill, Mr. Hollande is trying to push through a tough budget for 2013, and has scoured the economy for ways to raise taxes, particularly on the rich. It includes his most controversial provision, which would levy a 75 percent tax on people earning more than €1 million, or about $1.3 million.

The capital gains measure was part of the government’s efforts to spare the middle class any higher taxes and focus on income earned through investment instead.

Making the capital gains tax more progressive, over a long period of time, doesn’t bother Mr. Chamboredon. The British, the Germans and the Swedes have something like that in place, he said. It was the vehemence of the attack on start-up capital, the lifeblood of all fledgling enterprises, that took him aback. “What was shocking here was the violence of the changes, not the principle,” he said.

“If you tell people that they have one in two chances to lose money when they invest in a start-up, but if they earn money, they will be taxed at 60 percent, there’s absolutely no reason to invest,” he said.

The danger, of course, is that France’s pigeons will simply fly away, joining what some fear is a swelling migration of rich French people to Britain, Belgium and elsewhere.

“If you have a company and you know you will have to sell it, you need to think about it, and exiting France is a scenario,” Mr. Chamboredon said.

The government responded to the pigeon protest within the first few days, offering, for instance, to exempt active founders from the tax increase. The entrepreneurs have dismissed these concessions as an offer to pluck everything but the head of the bird.

In Mr. Chamboredon’s view, the pigeons have already landed themselves a place in history by upending the usual sequence of French political discourse, which often involves street protests.

“This time, the legislation was trotted out, there was a demonstration — a mobilization — on the Internet that was completely peaceful,” he said. Now, the discussion — which heads next week to the National Assembly — can begin, in the open and in earnest.