THE COLOR OF MONEY:
GREEN OR GOLD

The Color of Money is a 1986 film adapted from a novel by American writer Walter Tevis. In the movie Paul Newman plays Fast Eddie, an aging pool shark, who teaches the young Vincent, played by Tom Cruise, the tricks necessary to become a professional player.

One small twist caught my attention: Vincent always wants to show how good he is and win at every game, while Fast Eddie has a hard time convincing the young man that he must lose sometimes in order to make even more money. A good pool player never shows his superior class upfront. In many ways he must deceive his opponents and not play fair.

This movie could be seen as an analogy of the current debate concerning the bonuses of stock market brokers. Is the traders’ work really worth the salary they receive, or should a salary be measured by the hard work involved or by the benefit to the employer? Another issue being debated right now is whether it is better to spend money in the private sector or pay taxes to the government. Is there such a thing as money poorly earned, dirty money, greedy money, honorable money? Or is the color of money green in the USA and should everyone have the freedom to spend it or invest it as they please?

THE “GOLD CARD” IMMIGRATION IN FRANCE
The French government is working on creating a new type of immigration status, which many countries have already had in place for years, i.e., one which allows foreigners to finance major business investments that would create jobs locally. The USA has offered this possibility for years, even though the requirements are extremely rigid. The amount of money that must be invested is between $500,000 and $1,000,000 in a commercial enterprise that has to create at least ten new jobs.

The information I have so far states that this new immigration status would last for ten years from its first issuance, and that the foreign investor must be either the senior manager or must hold a minimum of 30% of the shares. The company will also have to create or salvage a minimum of 50 employee positions. Another option would be to give immigration status to foreigners who invest a minimum of ten million euros in an existing French company.

We also have to consider the interpretation of this new status. Each préfecture will have the power to modify these requirements if they consider that their region is suffering from too much unemployment or too few businesses. In this case it is quite certain that there will be no minimums mentioned in the law to limit their power of interpretation. We therefore need to quickly ascertain what will actually be the minimum requirements.

Usually I do not bother to bring up new legislation until it is passed, and sometimes I even wait a little to see how it is interpreted and applied by the local level of the administration, but in this case, it is certain that this status will be created and the name “gold card” will be adopted by the civil servants at the préfecture and by other professionals in the field. For example, I am quite sure that a “modest size project,” such as buying a small business with ten full-time employees in the north or north-east part of France, will draw sufficient attention from the préfecture for the foreigner to be given the immigration status.

The media also mentioned that the government wants to make sure that legitimate money, not laundered money, is used for this investment. Therefore serious inquiries will be made to insure this point. Here, too, this statement should be taken with a grain of salt since in today’s world it is very difficult to prove the exact origin of funds at the beginning of a business transaction. If there are any concerns about this, the préfecture will certainly err in the direction of protecting the employees, and so will probably ask for substantial proof. Politically speaking, the gold card status will be difficult to withdraw once it is issued. Also keep in mind that no matter what is published afterwards about how strict the controls are going to be, the préfecture and the député will work together to downplay any charges of dubious funding. This said, the new status will have a marginal impact on our work considering the very small number of people who would qualify for the gold immigration card. Nevertheless I will keep you informed.

CHANGING JOBS AND THE RENEWAL OF THE CARTE DE SEJOUR
This month I met with the civil servants working at the MOE (Main d’Oeuvre Étrangère), an office branch of the DDTEFP (Direction Départementale du Travail, de l’Equipement et de la Formation Professionnelle). This office is the authority that issues the right to work as an employee to foreigners from non EU countries. During the conversation with the man who was reviewing a case I was working on, I learned that the ministère was considering changes in the near future that would make it more difficult to change to an employee carte de séjour. Nothing is definitive, but it is clear that it is going to be a lot more difficult to go from a student carte de séjour to an employee one. This is very bad news for those making this common request. The guideline at the MOE gives its civil servants the right to veto the request if they feel that there is already a significant number of French residents who are unemployed and who would qualify for the job. Considering the fact that the job market in France almost always has a certain percentage of unemployment in any field of work, the civil servants in this office have the right to use these figures to support the veto. In the past I had suggested that the way to get around this veto was to arrive with supporting documents to show the uniqueness of your situation as a foreigner living in France, proof of your integration into normal French life, an explanation of the unusual profile of the job request, and at the same time emphasizing that you are the perfect match. Up until now a well-documented file on these grounds has been enough, but this may no longer be the case in the future. I will keep you informed.

DNA TESTING AND SUBMITTING A REQUEST FOR AN IMMIGRATION VISA BASED ON FAMILY TIES IN FRANCE
About a year ago a law was passed authorizing the French administration to ask for DNA testing to be performed to make sure that an applicant was truly related to a legal French family member, either a parent or a child. According to the statements made by the French government, this procedure was supposed to be especially useful for verifying the requests filed on the African continent, where it is easy to have phony originals made. It takes very little reflection to see how damaging the consequences of this testing can be on families if the result does not match the birth certificate.

The French government now acknowledges that the confidentiality of the results cannot be guaranteed, and the issue of liability from the leaking of information is being seriously considered. These are only two of the many objections that the Ministre de l’Immigration has put forward to explain why he is suspending this procedure for the foreseeable future. This, in French political jargon means that it is certain that this procedure will no longer be used.

It is also important to realize that the vast majority of the visas issued by France are substantiated on other grounds, consequently this procedure would have been rarely used in any case.

A WATER LEAK IN AN APARTMENT AND AN ABSENT TENANT
A couple of days ago, I was told another story of an American family, staying in Paris for a short time, who had had their water turned off without any notice and for an undetermined duration. I fully understand the shock this can bring, since it seems that it only happens when one is in the shower or taking a bath!

In France there can be numerous reasons why this happens but the most common one is that there is a significant leak in the apartment that can be seen in the flat below. After making a few phone calls and knocking on the door several times to no avail, the property manager (le syndic) or the president of the condominium association may decide to take drastic measures and call the firefighters (les pompiers), who have the right to enter an apartment using ANY MEANS! They are quickly faced with the choice of breaking into the apartment by either the front door or the window. Once they are in, they will identify the leak and whether or not the water can be shut down at that level. If that is the case, then only one flat will be without water. Otherwise, they will shut down the water supply at the next level, which can be the entire building or just one floor, depending on the size of the building. In any case, it is an extreme procedure and nobody wants to be the victim of this.

Many years ago this happened to one of my clients who was summoned by the property manager to return to Paris immediately if he did not want his front door smashed in. Although it was the Christmas season, he came the next day, paying an exorbitant price for a plane ticket from NYC, only to find out that the origin of the leak had been incorrectly ascertained. He now has entrusted a couple of people with copies of the key to the front door to avoid such an incident happening again.

In the past the gardiennes in a building had a key to all the units and, among their other duties, would take care of this kind of problem. At the same time, we have all heard the horror stories of what a bad gardienne or concierge can do when you entrust your keys to them. The slow but continuous disappearance of these professionals in Parisian buildings is another topic and unfortunately their removal has been usually motivated by the cost of the services they provide: cleaning the floors and handling the trashcans. Unfortunately, the additional benefits performed by a gardienne are often completely forgotten when the General Meeting makes the decision to get rid of them.

ECOLOGY WILDLIFE PRESERVATION AND DEER IN THE GARDEN JUST ABOUT EVERY DAY.
Today everybody is looking at ecological issues on a local and global level and many people are expressing concerns about the future of our planet and the survival of humanity. I would like to illustrate what I have recently seen to be visible changes in recent years, although I have no expertise to say if this information is pertinent on a grand scale, but it does feels important enough to be mentioned.

The North Pole ice pack is receding
Numerous political and corporate decisions are now motivated by the fight against global warming. Although most people are not aware of the effects of climate change, there are noticeable signs. For example, in August of 2008 my mother went on a cruise along the northern part of Greenland’s east coast, a cruise that was impossible ten years ago, due to the ice along the coast. She flew to the Norwegian island of Svalbard, the closest European airport to the North Pole, and from there she took a Russian icebreaker for the cruise. Similar cruises are now being offered along the islands in Canada’s Arctic ocean, in the passage that connects the Atlantic ocean to the Pacific. Merchant ships have usually been able to use this passage during the summer months, with the aid of ice breakers, but with global warming and the subsequent melting of the ice pack, the Northwest Passage, as it is known, has become even more navigable during the summer.

The wildlife is coming to the cities
Here is another small but significant example, but I am not even sure if global warming has anything to do with it. Most of the cities along the US coastal interstate I95 have high-density populations, and this is especially true between Boston and Washington DC. As I stay in the state of Delaware in the vicinity of this highway every summer during my vacation, I see the population growing and more and more suburbs, roads and shopping centers being built. Every day this past summer I watched a doe and several fawns crossing the road and backyard and entering the golf course, but I don’t know if they were the same ones each time or different groups. I have always been fascinated by the resilience of wildlife in the USA and how they adapt to the urban and suburban life there, something I have never seen in France.

Best regards,

Q & A

THE COST OF HAVING SOCIAL PROGRAMS IN FRANCE

QUESTION
In my effort to evaluate the probable cost of President Obama’s health plan I would like to compare it to the French system and would like to know how much the French system actually costs, without trying to figure it out based on my French payslip deductions. Concerning the USA, I believe that a tax cut would greatly help the Americans at this time. Healthcare, ugh. How about revising some of the rules of the health insurance industry instead of making everyone use a government program? How about making the lawmakers use the same program that they want to stick us with? You have never told us how much of a French worker’s earnings are used to pay for health care. In fact, I would love to know the total percentages of taxes paid by a French person.

ANSWER
If I were to accurately answer your question in a few words, I would say that a large portion of the French worker’s earnings finance health-care programs but an even larger portion of the American worker’s earnings finance a similar package of benefits. The key difference is that in France, the employee and employer combined pay the social charges and taxes, and in the USA, the employee and employer pay a combination of premiums (health and retirement plans) and taxes for the basic social protection part of the costs.

I would like to state upfront that I have not argued that Mr. Obama’s plan was automatically the best solution for the USA. I wanted to address the issue of its cost both at the beginning (which is going to be much higher than the initial calculation, as I explained in my September issue) and why it is possible, though far from certain, that 50 years from now what originally seemed to be the high cost solution would actually end up costing less than any other solution. Also, you share with many others the feeling that the existing situation cannot last very long and that something needs to be done. Indeed, current American thinking may push the private sector to regulate the situation so that a balance can be found. To reform the health insurance industry and pass a national health insurance plan, President Obama is relying on the American logic used during the first half of the 20th century, best illustrated by President F. D. Roosevelt and his New Deal policy. Since 1986 the majority of the banking and insurance companies, as well as the medical industry (health insurance, pharmaceutical and private hospitals), have generally chosen to act upon greed alone and have not served the interests of the American nation. Unfortunately, their actions have not reflected the integrity of many individuals working in these professions who try to be true to their professional ethics.

Subsidizing an economy that does not have a “socialism base” is always risky and should be done with care. Did the “Clunkers for Cash” program have the wanted effect of getting people to buy new cars and to help keep the car manufactures solvent? Objectively it did. Was this subsidized program worth it? I do not know. I just know that good business news came out after the program was implemented and that this resulted in rebuilding the trust in the future and in the strength of the American economy. This good news gave hope to the general public that a brighter future was near. Hope and the good news that nourishes it are very important variables when measuring the success of an economic policy. If getting out of the financial crisis costs taxpayer money through subsidizing “poorly-manufactured American cars” and deferring the consequences of the free market system of supply and demand, then this is really a small price to pay compared with having the crisis last for many months or years, destroying more lives and good businesses.

Now about the cost of the French socialist system: this is an extremely complex question since the cost must be compared to the services offered.

The concept of socialism as defined by the Western social democrat parties must be defined in order to have some clarity in this debate. This is my definition of the current meaning of the word Socialism, according to the social democrats:

The role of the state is to protect the individual from cradle to grave against all the major accidents in life.

Up until the 1990s, Scandinavia used this version as the basis of their social system. Indeed, losing your job or your home, being sick, becoming handicapped, etc., were all perceived as accidents. Through subsidies, public lodging, job retraining and so on, the state guaranteed that you would be able to maintain, as much as possible, the same quality of life.

The only official definition of socialism comes from Mr. Karl Marx’s philosophy, and can be stated this way:

A theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.

This is the stage following capitalism in the transition of a society to communism, characterized by the imperfect implementation of collectivist principles.

Over the last 30 years all the socialist parties and almost all the communist parties in Western Europe have renounced this classical definition and have instead chosen the social democrat definition, which included accepting capitalism as the basis for organizing the business world.

The USA has never had its society organized this way and I have never heard any presidential candidate coming from an American political party advocate such a way of organizing the country. Based on this definition, President Obama’s health plan does not even remotely fit the definition of “socialism” as defined above.

Concerning the calculation of the costs that the French worker pays, there are different components to consider. To simplify, it means that if a French employee receives 100 euros as a salary then the cost for the employer is 200 euros, although this does not take into account the income tax owed by the employee. The true burden of income tax in France is quite low and is on the average equal to the one in the USA. Considering the vast number of programs financed by these taxes, it is close to impossible to list all of them with a specific ratio. This is a general evaluation, which should be fine-tuned considering that lower salaries incur lower tax ratios.

But this evaluation is highly inaccurate since there are two crucial things to add. The first thing is that French social taxes pay for many things, including the National Healthcare system, the funding for all the family subsidy programs and the French National Retirement program. The latter is comparable to the American Social Security and private retirement programs like 401K plans and Individual Retirement accounts (IRAs). In France the social charges encompass much more than just health; they cover the entire social net as defined by the social democrats. The second thing is that it makes no difference whether an employer is paying $100 towards taxes, or putting the same amount into their employees’ retirement fund and paying their health insurance premiums, it is the same cost for the employer.

If we compare the combined financial burden of the employer and the employee in France to the costs of the same benefits in the USA, the business media in the USA and in Europe have reached the same conclusion. Costs are higher in the USA than in France for the same benefits. Most Americans do not receive the benefits from their government or employers and also do not save enough for retirement, so therefore Americans pay less and of course get less for it too. Here then is an important question in the current debate; is the US government properly equipped to serve the needs of the American population? Up to now, I would have to say NO to that question. 30 years ago a new political and economic era was ushered in by President Reagan, who favored supply-side economics, tax cuts and cuts in social spending. Now the question is whether his legacy is still in force.

So politically there is certainly a difference to be made between paying taxes and paying premiums, and a lot of the current heated debate in the USA comes from this. If the issue is only cost, then it should not make any difference.

CARTE DE SEJOUR AND BEING PAID BY CHEQUE EMPLOI SERVICE UNIVERSEL

QUESTION
I am an American citizen with a carte de séjour that allows me to be self-employed in France and I have renewed it for the past five years. If I were offered a job in another country, would that affect my status as a French resident? Also, I have considered doing elder care in France and would like to know if the family can pay me using the chèque emploi service, considering my status is self-employed?

ANSWER
I am going to answer “NO” to all your questions, considering the way you address these issues, although if you modify slightly your existing status I can answer “YES” and therefore you will be able to attain what you want and safeguard your immigration and fiscal status in France.

In order to make this answer comprehensible, I would like to address these issues in reverse order. The key issue here is the nature and the scope of your right to work.

This said, the main issue that you should keep in mind is that all the aspects of your questions rotate around one fact; the préfecture only issues the right to live in France, and does not address the right to work in France which is issued by another authority, and there are several of them!

Regarding the issue of being paid by chèque emploi service, under no circumstances can you be paid with these checks since the law concerning them automatically makes you an employee. This is because the employer pays your social charges for you, just as a normal business would do if you were an employee. I remind you that what is now called C.E.S.U. is nothing more than a specific way of paying an employee who works in the employer’s home or garden. The position can range from a baby-sitter to a cleaning lady, handyman or gardener. The reason why this set-up has become so popular is that French law imposes a lot of paperwork and excruciating calculations to issue payslips, so much so that now just about all payslips in France are issued by accountants. Concerning the chèque emploi service, the French administration offers a free service to calculate the taxes owed by both parties and issues both the payslips for the employee and the tax bill for the employer. This alone is a substantial saving for the employer, in addition to the fact that the social charges that the employer pays for his employee, i.e., tax bill, offset the income tax of the employer up to a maximum limit of 20 000 €. There are therefore many advantages for an employer to use thechèque emploi service, since they actually end up paying less for your services because they receive a tax deduction. As you can see, this is an employer-employee relationship and your carte de séjour right now only allows you to work as a self-employed person. Regardless of how you perceive this, you have clients, you do not have employers. Furthermore, you will never get the right to work as an employee by being paid with C.E.S.U. If you cash even one check it will show up on your income tax statement, l’avis d’imposition. Then when it is time to renew your current carte de séjour, the préfecture will demand to see your income tax statement and will see that you have salaried income, and will deny you the right to stay legally in France. Logically, this also means that the préfecture will deny any carte de séjour no matter what status you are requesting!

Now let’s imagine that you think of your new activity, elder care, in the same way that you think of your current profession, i.e., you are a self-employed person offering services on a contract basis. Since your current activity is identified by the “APE code” on your I.N.S.E.E registration statement, the new activity is not included. On the other hand, the good news is that you can add more codes to your activity definition without running into major trouble. The only thing you must be very careful of is to make sure that you register this new activity with URSAAF in such a way that it is accepted by the state, and that your choice of APE code is such that it more or less covers this activity. I believe that you should ask for professional help in choosing the codes so you can perform all the tasks without running into trouble.

This leads us back to your first question. You cannot accept a job in the UK since your immigration status is only in France, and consequently, you do not have immigration rights in any other European country, but as a French self-employed person, you have the absolute right to perform services anywhere in the EU. This is one of the founding rules of the EU when it was created in 1954. So what is left to be resolved covers just two small points? One, are the new tasks you that you will be performing in the UK covered by your current “APE code”? If yes, you are ready to travel, if not, then you just need to add them to your existing registration as mentioned above. The other issue is that you do not have immigration status in the UK; if you are planning on staying there for an extended period of time, then you will probably be faced with an immigration issue, which should be easy to resolve since the European regulation grants you the absolute right to this on a short-term basis. So inquire at the British consulate in Paris to find out what is needed to get the proper visa.