France is looking to its richest citizens and companies to help solve its massive deficit problem. On Sunday, France’s highest court gave the thumbs-up to a new law pushed by the country’s President Francois Hollande that hits incomes topping one million euros, or about $1.37 million, with a 75 percent tax rate.
The new tax was a key plank of Hollande’s platform when he ran for France’s highest office two years ago. When the new tax was first proposed, it caused an uproar among the nation’s wealthiest residents. Most notably, actor Gerard Depardieu, the country’s biggest domestic movie star, left France and renounced his citizenship in protest.
Instead, Depardieu became a Russian citizen, leading France’s Prime Minister Jean-Marc Aryault to label the actor “pathetic.” Earlier this year, however, Depardieu sought to quell the backlash, calling his apparent defection “a big misunderstanding.”
Several of France’s top professional soccer teams threatened to stop playing games as a stand against the new tax. But that threat never materialized.
Last year, the same high court ruled Hollande’s 75 percent tax plan unconstitutional.
There is one key difference between the version of the plan on the table last year and the one just granted approval by the France constitutional council. While the earlier version taxed individuals on their incomes over the million-euro threshold, the new version makes companies responsible for paying the tax on salaries that top a million euros.
Hollande has said that the tax is primarily “symbolic” and not expected to raise much revenue for the cash-strapped French government. But he believes it makes a statement about economic fairness.
In fact, the new tax rate is set to remain in effect for only two years.
Polls have shown that the French public favors the new tax on the rich, and the press has backed it as well. When French billionaire Bernard Arnault announced he, too, was leaving his homeland in protest, one typical newspaper headline advised him, “Get Lost, You Rich Bastard.”
Arnault soon abandoned his plan to abandon France.
The top income tax rate in the United States is just under 40 percent, imposed on incomes exceeding $450,000 per year. That is a marginal tax rate, meaning that the top percentage applies only to the amount of money earned on top of the $450,000 mark.
The top tax rate in the United Kingdom is 45 percent, according to the BBC report.