Get PJ Media on your Apple

The PJ Tatler

by
Rick Moran

Bio

December 29, 2013 - 12:13 pm

The French Constitutional Council approved President Francois Hollande’s plan to tax salaries above one million euros ($1.4 million). The Council had sidelined the proposal earlier this year because it applied to individuals and not households. But Hollande fixed that by making employers pay the tax.

Reuters:

It was originally designed as a 75 percent tax to be paid by high earners on the portion of annual income exceeding 1 million euros, but the council rejected it last year, saying it was unfair. France’s top administrative court later said that 66 percent was the legal maximum for individuals.

The Socialist government has since reworked the tax to levy it on companies instead, raising the ire of entrepreneurs.

Under its new design, which the council found constitutional, the tax will be a 50 percent levy on the portion of wages above 1 million euros in 2013 and 2014.

Including social contributions, the rate will effectively remain about 75 percent, though the tax will be capped at 5 percent of a company’s turnover.

The tax is expected to affect about 470 companies and a dozen soccer clubs, and is forecast to raise approximately 210 million euros a year.

The Constitutional Council, a court comprising judges and former French presidents, has the power to annul laws if they are deemed to violate the constitution.

Tax increases designed to reduce France’s budget deficit have fuelled rising discontent in the country, with recent polls giving Hollande the lowest approval rating of any French president on record.

His 2012 supertax election pledge infuriated high earners in France and prompted actor Gerard Depardieu to flee the country. It has also alienated entrepreneurs and foreign investors, who have accused Hollande of being anti-business.

Hollande has said that the wealthy should contribute more to help to repair the country’s finances, arguing that the supertax should also encourage companies to curb excessive executive pay.

In Sunday’s ruling, the Constitutional Council rejected planned wealth tax measures that it said imposed levies on potential gains – such as those on life insurance policies – and thus risked overestimating a taxpayer’s actual resources.

It also quashed several measures designed to crack down on tax avoidance schemes through which individuals and companies use legal loopholes to minimize their tax bills.

The tax is confiscatory regardless of who pays it. Nor does it matter that “the rich can afford it” or that the tax will affect relatively few people. There is an important principle of limiting government’s power that even socialists must acknowledge as vital to maintain liberty. A government that can tax your earnings at 75% can do just about anything.

You have to guess that President Obama and the Democrats are gazing with longing on Hollande’s “supertax.” They’ve probably got the cash from an American version of the tax already spent in their heads. Thankfully, there’s little consensus in Congress to be that punitive.

But 5 years from now, who’s to say?

Rick Moran is PJ Media's Chicago editor and Blog editor at The American Thinker. He is also host of the"RINO Hour of Power" on Blog Talk Radio. His own blog is Right Wing Nut House.

Comments are closed.

Top Rated Comments   
>>>Thankfully, there’s little consensus in Congress to be that punitive.<<<

That statement is unsupported. There may currently be a consensus that is is not possible, yet, but the entire Democrat party, and the Institutional Republican party would love such so long as they could dole out exceptions to themselves and selected connected people.

I rather suspect that since the tax has been imposed on a corporate basis, there will be some interesting re-arrangements of corporate HQ's and offices within the EU. And the exodus of the productive class will continue. Followed by .... corrective ... measures by the French State.

Subotai Bahadur
15 weeks ago
15 weeks ago Link To Comment
All Comments   (10)
All Comments   (10)
Sort: Newest Oldest Top Rated
Ah, Democracy and Equality, goals of the French people and state. I wish for them what they wish for themselves.
15 weeks ago
15 weeks ago Link To Comment
I am surprised the tax raises only another 210 million euros. That's got to be a pittance compared to total French spending. The costs to the French state, though, could be much greater if the tax prompts enough of the wealthy to vote with their feet and leave France (which I understand the wealthy are doing already).
15 weeks ago
15 weeks ago Link To Comment
Doesn't that mean we're "ahead" of the French? Some years ago, the highest income tax rate in the U.S. was 91%. Yes, it's come down since then, and many thanks for that...but given the swelling political power of envy, what's to keep the rates from rising that high in the future? Especially if we should suffer a couple more Democratic administrations with majorities in both houses of Congress?
15 weeks ago
15 weeks ago Link To Comment
What can the French do?

Be rude, run away and surrender.

Well, at least they are good at something.
15 weeks ago
15 weeks ago Link To Comment
This reminds me of the joke - How many Frenchmen does it take to defend Paris?
Answer: Nobody knows, because its never been tried.
Nyuk, nyuk.
15 weeks ago
15 weeks ago Link To Comment
Like kindly Mrs Trotter, my favorite math teacher, used to say "75% of nothing is nothing".
15 weeks ago
15 weeks ago Link To Comment
At the end of 2010, the Democrats held the White House and both Houses of Congress (as the new GOP members would not be sworn in in the House of Reps until January). They did not have the votes then within their own party to raise taxes and voted to largely make permanent the Bush era tax rates that they had already previously extended.
15 weeks ago
15 weeks ago Link To Comment
"run for the border"
15 weeks ago
15 weeks ago Link To Comment
>>>Thankfully, there’s little consensus in Congress to be that punitive.<<<

That statement is unsupported. There may currently be a consensus that is is not possible, yet, but the entire Democrat party, and the Institutional Republican party would love such so long as they could dole out exceptions to themselves and selected connected people.

I rather suspect that since the tax has been imposed on a corporate basis, there will be some interesting re-arrangements of corporate HQ's and offices within the EU. And the exodus of the productive class will continue. Followed by .... corrective ... measures by the French State.

Subotai Bahadur
15 weeks ago
15 weeks ago Link To Comment
And the decline of France continues.
15 weeks ago
15 weeks ago Link To Comment
View All

One Trackback to “President Hollande Gets His 75% Tax on the Rich”