France’s Constitutional Council has tossed the 75 percent tax on millionaires because a major loophole made it discriminatory in the way it applied to certain households.
The new tax rate is a key component of the agenda of the country’s socialist president, Francois Hollande. The new tax rate would have gone into effect on January 1.
According to Reuters, the court determined that the new tax levy was fundamentally unfair because it failed to guarantee taxpayer equality:
“The Council, made up of nine judges and three former presidents, is concerned the tax would hit a married couple where one partner earned above a million euros but it would not affect a couple where each earned just under a million euros.”
The Council is empowered under French law to determine the constitutionality of laws, elections, and referenda.
Actor Gerard Depardieu and others in his income bracket who have become tax refugees may not want to move back to their home country just yet, however. The Guardian reports that the office of the French prime minister indicated that the government will tweak the millionaires tax and resubmit it for approval.
AP referred to the Council’s action as a “stinging rebuke” to Hollande who is suffering from low approval ratings with the electorate:
“The French government approved the tax in its most recent budget, amid criticism by some that it would do little to stem the country’s mounting fiscal problems and would drive away the wealthiest citizens. Hollande’s popularity, meanwhile, has been tanking as the country’s unemployment continued its rise for the 19th straight month.”
The constitutional court also lowered several other proposed tax increases on grounds of tax fairness.