France okays millionaire’s tax, industry infuriated

Tags: News
French president Francois Hollande received approval from the country’s constitutional court to proceed with his plan to tax salaries above ¤1 million at 75 per cent for this year and next. Under Hollande’s proposal, companies will have to pay a 50 per cent duty on wages above ¤1 million ($1.4 million).

The measure, introduced in line with a pledge by president Francois Hollande to make the rich do more to pull France out of crisis, has infuriated business leaders and soccer clubs, which at one point threatened to go on strike.

In combination with other taxes and social charges, the rate will amount to 75 per cent of salaries above the threshold, the court wrote in a decision published on Sunday. The companies that pay out remuneration above ¤1 million will, as expected, be called upon for an effort of solidarity on remuneration paid in 2013 and 2014, the economy ministry said in an emailed statement. Hollande, who once said he didn’t like the rich, announced the 75 per cent 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 per cent 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 per cent 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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