France’s Hollande Gets Court Approval for 75% Millionaire Tax
French President Francois Hollande received approval from the country’s constitutional court to proceed with his plan to tax salaries above 1 million euros at 75 percent for this year and next.
Under Hollande’s proposal, companies will have to pay a 50 percent duty on wages above 1 million euros ($1.4 million). In combination with other taxes and social charges, the rate will amount to 75 percent of salaries above the threshold, the court wrote in a decision published today.
“The companies that pay out remuneration above 1 million euros will, as expected, be called upon for an effort of solidarity on remuneration paid in 2013 and 2014,” the Economy Ministry said in an e-mailed statement.
Hollande, who once said he “didn’t like” the rich, announced the 75 percent tax in February 2012 as part of his presidential campaign to appeal to his Socialist base. It has become a symbol of his government’s record-high taxation rate.
A first proposal to put the change into law was turned down by the constitutional court in December last year because the tax applied to individuals and not households. The country’s top administrative court said any rate above 66 percent would be rejected as confiscatory.
Hollande revived the plan this year, making it apply to salaries and be paid by employers rather than individuals. The total amount is limited to 5 percent of a company’s revenue.
The court examined the proposed tax after more than 60 members of parliament and more than 60 senators filed their opposition, it said.
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Almost a year ago, the French constitutional court ruled against Francois Hollande's triumphal blast into socialist wealth redistribution, with his proposed 75% tax rate on high earners, and so indefinitely delayed the exodus of the bulk of French high earners (even if some, like Obelix, aka Gerard Depardieu, promptly made their way to the country that has become the land of solace for all oppressed people everywhere, Russia) into more tax-hospitable climes. That delay is now over, when earlier today the same court approved a 75% tax on all those earning over €1 million. The proposal passed after the government modified it to make employers liable for the 75% tax. As BBC reports, the levy will last two years, affecting income earned this year and in 2014.
And with the tax passage, the preparations for an exodus by all high earnings begin, first among the local football teams. BBC reports:
While the numerous unintended consequences of this shock and awe tax hike will be amusing to watch in real time as this move will almost certainly be the long-awaited catalyst to push France into its long-predicted recession (to the benefit of countries like Belgium where the French uber-rich are already relocating to), one wonders if the drop in the value of French ultra-high end real estate will be offset by the soaring valuations of London's already "beyond housing bubble" home prices, and just what the local response will be now that domestic real estate is even more inaccessible to anyone but the wealthiest global oligarchs and billionaires (aside from the capital gains tax of course, which as we wrote previously, is about to be launched first in London, and then everywhere else).
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