French court rejects 75 percent millionaires’ tax
France’s Constitutional Council on Saturday rejected a 75 percent upper income tax rate to be introduced in 2013 in a setback to Socialist President Francois Hollande’s push to make the rich contribute more to cutting the public deficit.
The Council ruled that the planned 75 percent tax on annual income above 1 million euros ($1.32 million) – a flagship measure of Hollande’selection campaign - was unfair in the way it would be applied to different households.
Unfair and unconstitutional
President Francois Hollande’s 75 percent millionaire-tax is unconstitutional because it doesn’t guarantee equality for taxpayers, France’s top court ruled.
Hollande’s plan would have added extra levies of 18 percent on individuals’ incomes of more than 1 million euros ($1.32 million), while regular income taxes and a 4 percent exceptional contribution for high earners would have been based on household income, the court said today in an e-mailed statement. As a result, two households with the same total revenue could end up paying different rates depending on how earnings are divided among members of those households, which runs counter to a rule of equal tax treatment, the Paris-based court said.
The tax, one of Hollande’s campaign promises, had become a focal point of discontent among entrepreneurs and other wealth creators, some of whom have quit French shores as a result. Movie star Gerard Depardieu, 64, said he was leaving France “because you consider success, creativity, talent, anything different are grounds for sanction.”
Centerpiece of François Hollande’s election campaign
The high tax rate was the centre piece of President François Hollande‘s election campaign earlier this year but it has infuriated France’s high earners, many of who have already moved to cities such as London.
The constitutional council is a politically independent body that rules on whether laws, elections and referendums are constitutional. It is made up of nine judges and three former presidents, and is concerned the tax would hit a married couple where one partner earned above €1m but it would not affect a couple where each earned just under €1m.
In a stinging rebuke to one of Socialist Hollande’s flagship campaign promises, the constitutional council ruled Saturday that the way the highly contentious tax was designed was unconstitutional. It was intended to hit incomes over €1 million ($1.32 million).
The largely symbolic measure would have only hit a tiny number of taxpayers and brought in an estimated €100 million to €300 million – an insignificant amount in the context of France’s roughtly €85 billion deficit.