France Abandons Tax Ceiling: High Earners Can Now Pay Over 50%
- Posted on March 3, 2011 at 7:50pm by
Jonathon M. Seidl
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PARIS (AP) — In a major turnaround, French President Nicolas Sarkozy and his indebted government are abandoning a tax ceiling for big earners he once hailed as key to modernizing France and luring investors.
Critics say the cap, which ensures that no one pays more than 50 percent of annual earnings in tax, is a sop to the rich at a time of belt-tightening across Europe.
Prime Minister Francois Fillon said in a speech Thursday that the tax cap had been “an imperfect remedy” for the heavy tax burden on the rich and will be abolished in a sweeping tax reform this year.
The reform will maintain a wealth tax that has also come under fire, Fillon said. The wealth tax is based on overall assets, and rising property prices have pushed some middle-income families over its threshold.
Tax reform is a top government priority this year and may serve as an awkward bookend to Sarkozy’s presidential term. This tax reform may be the last big initiative by Sarkozy before presidential elections next year.
He pledged the tax ceiling while campaigning for the presidency in 2007, and it was among the first measures passed after his election. The reform resulted in euro30-million ($41.5-million) tax rebate for L’Oreal heiress Liliane Bettencourt, Europe’s richest woman, drawing criticism from oppposition parties.
It became a symbol of his efforts to energize and open up France‘s economy at a time when Britain and other rival economies were roaring ahead and France’s was stagnating.
But since then, a global financial meltdown and European debt crisis intervened and Sarkozy’s rhetoric shifted.
“Since 2007, we have had the courage to reform, but we should also have the courage to adjust our assessment and listen to public opinion,” Fillon said.
The tax ceiling drew criticism from the opposition left and even members of Sarkozy’s conservative party.
It only affected a small percentage of taxpayers – 234,000 at the time it was passed – but was seen as symbolic of Sarkozy’s efforts to lure rich taxpayers back to French soil away from tax havens.
French rock legend Johnny Hallyday, a friend of Sarkozy’s, disappointed fans when he moved to Switzerland in 2006 to escape high taxes.
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Bernard
Posted on March 4, 2011 at 5:08pmThe French government is playing a dangerous game. The super rich or even the rich have the flexibility to relocate to other nations with friendlier tax laws. It has already taken place in the USA where the rich are fleeing states like New York and California due to their high taxes. Some are even giving up their citizenship in order to become citizens in foreign lands to escape the INS. This includes many that are born and raised Americans. If it can happen here it can happen in France.
Report Post »For once these super rich go so do many companies that they own and the loss of jobs, revenues and taxes.
katiefrankie
Posted on March 4, 2011 at 6:28pmYay! Just another reason NOT to move New York. (And I thought my, “I am not living withing the same state as my in-laws,” was all I needed.)
Report Post »CaptainSpaulding
Posted on March 4, 2011 at 3:36pmPay your fair share*.
* – fair share = all of it.
Report Post »Scalzo
Posted on March 4, 2011 at 11:00amFrance. What a hell hole….
Report Post »GETLIFE
Posted on March 4, 2011 at 4:11amIn France, the wearing of the full veil is banned as of next month. Sarkozy’s reasoning? Basically–”That is not who we are,”
Report Post »TexasCommonSense
Posted on March 4, 2011 at 9:38amGood for him. Assimilate or go home.
Report Post »GETLIFE
Posted on March 4, 2011 at 3:50amConservatives here want Sarkozy re-elected–in spite of his reasons here. They have seen him try to dig France out of her Socialist pit. Don’t go there USA. It only takes one generation born into such a system, then everyone is convinced they need it to survive. Lots of calculating how to get the most“security” –and the most vacation time. Very little real thriving or creativity though. Lots of superficial creativity–paid for by taxpayers. Sarkozy understands the humanist part of capitalism, and has been brave in many refrorms.
Report Post »A Doctors Labor Is Not My Right
Posted on March 4, 2011 at 3:27amFrance! Just stop spending so much! We need to do that, here, as well!
Report Post »Snowleopard {gallery of cat folks}
Posted on March 4, 2011 at 3:45amAgreed, we need to stop spending outside of our means to do so; and to think the POTUS wants us to become more like France…anyone have the feeling another set of tax hikes will try to be snuck in something by the president, or via some form of ‘regulations’ by one or more of the agencies…
Report Post »thunder4570
Posted on March 4, 2011 at 7:55ampoor Johnny depp has no place to hide any more!
Report Post »TexasCommonSense
Posted on March 4, 2011 at 9:34amA Doctors Labor Is Not My Right, I totally agree. I understand some people, in Ney York for example, al ready pay more than 50% when you look at their total tax burden on local, state and federal. At least they have the option to move to a state like Texas where there is no income tax. French citizens are pretty much stuck. The have me sympathies.
Report Post »J.C. McGlynn
Posted on March 4, 2011 at 1:15pmIt looks like my dad, and alot of his buddies, wasted their time kicking the nazis out of France.
Report Post »hifi74
Posted on March 4, 2011 at 2:54pmI’s not a spending problem, its a revenue problem….barf! When will these silly rubes get that you can’t spend more then you have?
Report Post »pajamash
Posted on March 4, 2011 at 4:59pmWhen the incentive (getting ahead, becoming wealthy) is gone…what is left? POVERTY FOR ALL!
Report Post »jackrorabbit
Posted on March 4, 2011 at 11:51pmI predict that unemployment in France is about to rise.
Report Post »GETLIFE
Posted on March 5, 2011 at 3:57amBelieve me, the 200,000 some rich that this affects are already managing their fortunes in an international way. 2012 is an election year in France. This is just re-election politics–it pleases the left, and Sarkozy supporters know that any socialist policy would be worse.
Report Post »Ruler4You
Posted on March 6, 2011 at 10:44amFrance can’t stop spending so much. It costs a lot to surrender every socialist whim. Discipline, economic, social or individual is a principled, controlled approach to responsible government. Not something of historical merit in most of Europe but most significantly absent from France’ history.
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