Sunday, March 31, 2013
Hollande Wants 75% Tax on Rich
France's President Francois Hollande proposed a 75% tax while campaigning last year. his controversial proposal was rejected by the French judiciary, however Hollande has not given up the fight. Holland's original proposal was an income tax of 75% on salaries over 1 million euros. Now Hollande is calling for businesses that pay out salaries over 1 million euros to pay the tax, rather than having the burden fall on the individual. Despite France's struggling economy Hollande seems committed to making reforms, but this slightly altered tax proposal seems destined to be rejected again.
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4 comments:
A 75% tax seems like a great way to keep companies from paying earnings over one million euros for an individual. I think if this proposed plan is accepted, France could lose some of its greatest thinkers to firms outside of France where more firms are likely to pay salaries above one million because there is not a significant tax on them.
I agree with Jacob. It seems impossible to retain the executives at that tax rate, despite the remaining large salary after taxes. However, I do like the tax on the companies rather than the individual. This does drastically hinder the competition for top minds in the industry (If I can pay for top quality, why be penalized for it?), but sets a ceiling for unnecessarily high compensation plans rather than the individual incurring taxes for his or her advantageous position.
The fact that this proposal is getting so much international attention reflects how drastic it would be for the french economy. Even though it would now be companies paying the tax, it would still drastically reduce firms' competition. Also, it may reduce wages down the ranks, as firms would have to cut back in order to make profits and be competitive.
Increase in taxes would reduce income by a far greater amount than the increase in tax (due to the magnifying effect of the tax multiplier). In a time of economic struggle, the primary goal should be to increase consumption and the increase in taxes would reduce it drastically. I feel that any additional taxation should be delayed till the time that consumption increases.
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