July 31 (Bloomberg) -- Nicolas Sarkozy is rolling out the welcome mat for thousands of rich French people who fled one of Europe's most onerous tax regimes. Few may heed his call.

In his first economic act as president, Sarkozy is pushing a tax law to lure back exiles such as rock star Johnny Hallyday, 64, and members of the Mulliez clan, who control the French retailer Groupe Auchan SA. The measure will increase exemptions on the ``fortune'' tax -- the bete noire of rich expatriates -- and cap the total individual tax rate at 50 percent of income.

Sarkozy, 52, needs these wealth-creators to help rekindle an economy that's lagging behind its neighbors and to sustain future growth. One challenge may be changing a centuries-old French attitude that regards people who make money with suspicion. That view has made penalizing the rich popular in France and leaves the wealthy uneasy about whether any pro-rich policies can last.

``In France, to earn a lot of money is to be seen as a little bit criminal,'' says author Anne-Marie Mitterrand, who moved to Belgium in 1997. ``In Belgium, the mentality is completely different. People who have a little money are not regarded as thieves.''

French suspicion of wealth runs deep. Sarkozy's Finance Minister Christine Lagarde, 51, traces it to French aristocrats who turned up their noses at people who earned their fortunes.

`Right to Laziness'

Even the revolution of 1789 didn't change that: ``The Right to Laziness,'' a 19th century book by Paul Lafargue, Karl Marx's son-in-law, advised against working more than three hours a day. And French author Honore de Balzac famously said, ``Behind every great fortune lies a crime.''

This prejudice drove French citizens to Switzerland, Belgium, the U.K. and the U.S., where at least 500,000 of them reside, either to make more or keep more of what they have.

London and the U.S. are preferred refuges for younger people. Switzerland, with about 200,000 French residents, attracts the retired and stars like Hallyday.

Angry at paying more than 72 percent of his income in taxes, he moved to the ski resort of Gstaad last December in a storm of publicity. After Sarkozy's May election, Hallyday hinted he might come back. His press attache Catherine Battner says he has yet to make up his mind.

Fleeing the Tax

Households fleeing the fortune tax climbed to a record 649 in 2005 from 370 in 1997, according to a study by French Senator Philippe Marini.

Another study by the Economic Analysis Council, which advises the government, says about 10,000 business directors fled in the last 15 years, taking 70 billion to 100 billion euros ($137 billion) in capital to invest elsewhere.

Marini said the average age of the emigrants is 53, compared with 66 for the 394,000 people still in France who pay the tax. A third of those who left had started paying it only two years earlier, suggesting they represented new and growing wealth, he said.

These ``are not people living off their interest, but entrepreneurs and investors who are needed by France's small and medium businesses,'' Marini said in his February report. Losing them means ``a loss of economic dynamism'' for France, he wrote.

Francois Micheloud, a Lausanne lawyer who helps clients settle in Switzerland, says he doubts French exiles will return anytime soon because they distrust government tax policies.

Changes Aren't Forever

``The French know their country better than I do, and they have the impression that any changes made now are not necessarily there forever,'' he said.

The fortune tax was introduced in 1981 as a populist move by Socialist President Francois Mitterrand. Mitterrand's center- right Prime Minister Jacques Chirac eliminated it in 1986, a move he later said cost him the 1988 presidential election because many French people saw it as helping the rich.

The Socialists, who defeated Chirac in 1988, reinstated the tax. When Chirac won the presidency in 1995, he toughened it. In 2006, it added 3.7 billion euros to French coffers, roughly 1.3 percent of total levies.

The rate is currently 0.5 percent for people with at least 760,000 euros in assets, including real estate, and 1.8 percent for people with assets worth more than 15.8 million euros. The levy is on top of income tax, which, at a maximum of 48.1 percent, is among the highest in Europe, according to the European Commission.

Eliminate Levies

Sarkozy's law caps the total tax rate, eliminates most inheritance levies and increases fortune-tax exemptions. The lower house of Parliament approved the measure on July 16, followed by the Senate on July 28. It could take effect as early as this year.

In Belgium, home to about 160,000 French citizens including members of the Mulliez clan -- France's second-richest family, according to the July issue of Challenges magazine -- the initiative hasn't sparked much interest, says Alain Lefebvre, 60. He moved to Belgium in 2005 and started ``Juliette & Victor,'' a magazine for the French community.

``I don't know anyone who will go back on the basis of Sarkozy's promises,'' Lefebvre says. ``It is hard enough to make the move once. Once done, it is difficult to undo.''

To contact the reporter on this story: Celestine Bohlen in Paris at cbohlen1@bloomberg.net

Last Updated: July 30, 2007 19:51 EDT