French 75% income tax struck down by constitutional council

[dipsydoodle]

Source: BBC News

France's constitutional council says it is overturning an upper income tax rate of 75% introduced by Socialist President Francois Hollande.

The tax rise for those earning more than 1m euros (£817,400) has been a flagship policy for Mr Hollande, who was elected in May.

The policy angered France's business community and prompted some wealthy citizens to say they would emigrate.

The new tax rate was due to take effect in the new year.

Read more: http://www.bbc.co.uk/news/world-europe-20864114

[xchrom]

1. ...

[sabbat hunter]

7. don't be fooled by the headline

[tecelote]

2. 91 percent: Top US tax rate in 1963

http://www.cleveland.com/datacentral/index.ssf/2011/02/historical_top_federal_income.html

[dipsydoodle]

4. At that time

the same applied to the UK with an investment surcharge added in too :

Taxation in the United Kingdom http://en.wikipedia.org/wiki/Taxation_in_the_United_Kingdom

[dotymed]

9. Have you ever seen an armored truck following a hearse?

All of these people seem to have forgotten what our predecessors understood. You can't take it with you.
Sure you can leave it to whomever, so they'll never have to work and start or continue a dynasty based on a feudal system. That has been going on since the beginning of time.
Most people used to be rational enough (and the laws forced this upon those without that foresight), to realize that their country had to distribute that wealth to public needs and yes, those less fortunate.
As many have noted in DU, we are in another gilded age. Robber barons are being created (usually at the peril of their fellow citizens) and they have no desire or laws that prevent them from realizing their goal of hoarding and passing this wealth on to their chosen few.
The big picture? Obviously this is not sustainable. It doesn't take a scholar to understand that with a fixed amount of wealth available to the populace, if that wealth is hoarded and not heavily taxed for redistribution, most will suffer. A few will have unlimited opulence. What are the alternatives? Print more money. This only serves to reduce the value of what has been hoarded and of course raise inflation to the point that only the few "lucky" ones can afford a decent lifestyle.
The solution? The people of the world must demand an end to corporate and elite rule. Laws must be re-enacted to somewhat level the playing field by re-distributing that wealth, or better yet a true democratic-socialist system, world-wide (not a centralized government) that ensures people before profits.
At the current pace of our world, we are "racing to the bottom" and will reach it soon. What will happen when the global depression hits full force? All currency, including precious metals will become worthless because they are not necessary. If we can't get off of our asses and fight for change, then I guess, we deserve what is inevitable. Our future generations may not deserve it, but they will be born into it.

[xtraxritical]

12. Democratic socialism, pray for it.

[russspeakeasy]

22. Well done...Thanks.

[marshall]

21. Oh for the good old days!

If only we could relive the last 50 years...

[Flatulo]

36. What percentage of the workforce earned enough to be taxed at 91%?

[aquart]

3. Damn fools.

[AnnieK401]

5. Not surprised - the wealthy no longer have loyalty to any one country. Sad but true.

I know this sounds crazy, but indulge me. The only way to keep this from happening (and stop the "globalization" - race to the bottom) is to have worldwide standards for tax rates, labor, etc. that keep the wealthy "powers that be" from moving residences, businesses, etc. to their advantage, but to the detriment of the rest of us. And it's extremely doubtful, at best, to think that could ever happen. So not sure if there is a realistic solution, or what it would be.

[sabbat hunter]

6. well according to the article

it isn't the high rate that is unconstitutional but how it was applied. to individuals instead of households.

so if you had 2 people in the household making 900,000 each they would pay the lower rate, even though their total income was over 1 million)

So once they make the change to the law so it is per household not per individual the law will be fine.


Isn't it better that it is per household not per individual?

[xchrom]

8. that would be fine -- let's hope they stick with that. nt

[Igel]

20. Nope.

It's meant to fine high-earners. Sort of class-warfare/populist rhetoric.

If you make a million euros, you pay the tax. If you're married and your combined income is 1 million, you wouldn't.

Exactly how it plays out depends on how they revise it. Is it 2 million on a couple? Then if you make 1.1 million and your SO makes 900k your household pays as though it were two 1 million-euro owners. Not what the rhetoric aimed at.

It's likely not to hit as many "high income earners". It'll affect families less than individuals.

Individuals are the ones more easily able to pick up and move when faced with punitive rates.

[sabbat hunter]

26. apparently all of France's income taxes

are on households, not individuals.

It will hit MORE high income earners.
why should a family who make a combined 1.8 million a year (900k each) pay less than one person paying 1.0 million?

[MADem]

27. What's to stop those two people from separating for the sake of saving money on taxes, and

establishing separate domiciles for tax purposes while continuing to operate as a family unit for all intents and purposes?

I don't think that's a solution either--I can't see people saying "Oh, well, then! Nothing to be done!"

I also think that people can live in the same "household" and live separate lives. So three or five or seven roommates have a combined income that is over the limit--are they obligated to pay a higher tax because they share the rent bill?

I also think the rate sounds onerous. If a tenant farmer were required to give 75% of his crops to the Lord of the Manor, we'd call that guy a serf, if not a slave. I will admit I don't know squat about the French tax code, if there are deductions and exemptions and tricks that make 75% turn into something considerably less than that in actual fact, but it just sounds like a lot of dough.

Now, I don't like the fact that the 1 percent don't pay taxes; I find these Warren Buffet scenarios infuriating. I think there need to be fewer, not more, exemptions the wealthier one gets--if that were the case, perhaps there wouldn't be any need for tax rates that "sound" usurious (even if they might not be in actual fact).

[sabbat hunter]

28. it is a marginal tax rate

just like the US

only any money over 1million is taxed at a 75% rate. So if someone made 1.5 million, 1million would be taxed at the lower rates, the 500k at the 75%.

[MADem]

29. It's still problematic, I think. In terms of perception, anyway!

Say you've got two people under one roof, married, living together, roommates, whatever--one "household." Their combined income exceeds the max. How do they figure out who owes what? Percentage of income? One from this one, two from that?

It seems like unfair taxation based on association, not upon the person's labor and earnings. One moves out, or lists the vacation address as their home of record, and they save a few bucks?

Again--I don't know the nuts and bolts of this business, but it just seems to me that when they go over 50 percent, the rich go ballistic and shriek like children being forced to come in early from recess. I think perhaps they ought to charge the bums a little more up front or disallow them certain exemptions so they don't have to deal with numbers that make it "seem" (falsely, but we know all about truthiness!) like they are being robbed of three quarters of the product of their labor (even if they didn't work a day for it).

I understand this new tax in France is why Johnny Depp and others beat a hasty retreat.

There's always a tipping point with the rich, it seems--of course, they're the ones who can afford to pick up and move away at the drop of a hat if they don't like the tax policies of their country of residence. A mansion here, a mansion there...what's the diff to them? They've got the scratch to vote with their feet...!

[dipsydoodle]

31. Not living togther or roommates whatever

For income tax purposes in France household classification refers to married couples and civil partnerships and their children in either case. Simply living together don't wash- individuals would do separate tax returns.

[MADem]

32. Would it benefit people to claim to live separately (without divorce) to avoid tax consequences? nt

[dipsydoodle]

33. Not sure

but don't confuse household with house. Household may refer to the family unit regardless of where they live.

[MADem]

34. I can see where the construct might not be well taken by some.

I know some couples who are married, living together, yet they have separate bank accounts and they split the bills down the middle, each paying their half--it's like roommates with benefits and a life insurance policy, or something.

The person who makes less money tends to get screwed in these sorts of arrangements, as the costs are sometimes not pro-rated. I knew one pair that fought like hell over the washer-dryer set upon divorce; neither one wanted to buy out the other, and they were both busy arguing over which appliance was worth more. They finally settled it by selling the things and splitting the cash.

In any event, and back to France--it'll be interesting to see how this all shakes out.

[Blasphemer]

30. That makes sense.... nt

[samsingh]

10. 75% is way to high

[DCKit]

11. Until you take into account all the ways to avoid paying taxes on $1 million.

Higher taxes seem to be the best method to convince the 1% to become "job creators". Otherwise, they just hoard their cash.

[PSPS]

14. No it isn't. You're assuming it's 75% on every Euro which it isn't.

The French income tax is graduated, so this 75% rate would apply only to the amount earned over 1 million Euros. If you earned 1.1 million Euros, the 75% rate would apply to the last 100K Euros, not the entire 1.1 million.

[dipsydoodle]

15. Yes

Thats the marginal rate.

[xtraxritical]

13. Many, many super wealthy people have created altruistic foundations.

Think Carnegie (built libraries in almost every town in America), Ford, Vanderbilt, Rockefeller, Gates, Buffet. It's not so much wealthy individuals that are screwing the people, it's the corporate entity that is screwing the people. The founding fathers wrote warnings about the corporate entity being antithetic to the Constitution.

[24601]

23. But the foundations fund their priorities - so the funds never reach the treasury. One man's

altruism is another's NRA.

[dotymed]

25. IMO, that is obvious when you look at the works that these "altruistic"

entities do. Look at the Bill and Melinda Gates foundation and their altruistic works. They fund anti-teachers union projects that train individuals to to replace the Union teachers. Meanwhile their factories (all not in America, I believe) are among the worse for wages and job conditions. Most are familiar with the apple factories in China where they place nets to catch the jumpers. They use slave labor and even deny them the dignity of choosing death over their intolerable conditions. Yet theses great examples of capitalistic success are treated like royalty (which I guess, by the size of their fortunes, they are, in this society) and envied.
What a horrific world we have allowed to exist. Only we can stop it and not with our computers...

[Nye Bevan]

16. This would be the perfect outcome for Hollande.

Keep the left happy by trying to impose a 75% tax rate on the wealthy.

But avoid wrecking the French economy and having most wealthy people leave France by having a court put a stop to it.

[Flatulo]

35. Wait, so you would forcibly prevent people from leaving the country?

How exactly would one do that without imprisoning them? Place armed guards on them at all times so that they can't sneak across the border?

[nlkennedy]

17. Hollande's bargaining chip..

As a politician, I would have started at 75%, knowing that it would go down...

A healthier number around 50% is still high, but sounds a lot better when compared to 75%...

Hollande is too intelligent to believe that 75% was going to stick...

Start high, work your way down...

[Lydia Leftcoast]

18. Yes, THAT'S how you negotiate

Start with more than you can reasonably get and you'll end up with SOME of what you want.

Are you watching and taking notes, President Obama?

[Nye Bevan]

19. Top rate in the UK is 45%, and under EU rules, the French are perfectly free to move to the UK,

and still be a relatively short train ride away from France. It's probably too much trouble to relocate from Paris to London to save 5% in taxes, but it's a no-brainer for the wealthy (who are more mobile) if they can save 30%. So I agree with you that 50% would be a much better rate than 75%.

[Zax2me]

24. Oh, well. Massive fail.

They weren't going to get anywhere anyway.
They could tax at 100% over 1mil and still gain little to nothing.
Except run their highest tax payers out of the country.