France: How to Demolish a 75% Income Tax

Wolf Richter's picture

Wolf Richter   www.testosteronepit.com

Socialist Party candidate François Hollande, frontrunner in the French presidential election, was trying to score some cheap points against President Nicolas Sarkozy—who’d been criticized for his cozy relationship with the rich. “I don’t like the rich,” he said—and followed up on February 27 on TF1, a French TV network, when he trotted out some ideas, such as the perennial favorite of capping gasoline prices. But most intriguingly, he offered his raptly listening compatriots two new income-tax brackets: 45% on income over €150,000 ($195,000) and 75% on income over €1,000,000.

“The considerable increases in remuneration of the bosses of the CAC 40—” he said about the CEOs of the largest publicly traded companies in France “—two million euros per year on average, how can we accept that?” And he went on very sensibly: “What I appreciate is talent, work, and merit, as those enable France to move forward,” he said. “What I do not accept are indecent wealth and remuneration....”

Published figures on how many taxpayers would be impacted are not available. Estimates are in the 15,000 to 20,000 range, perhaps up to €250 million in additional tax revenues. Even if small, it’s “a message of social cohesion,” he said, and not just that, but it’s also a sign of “patriotism to accept to pay additional taxes to put the country back on its feet.”

France does need to get back on its feet. Unemployment is rising. New vehicle sales are plunging, and French automakers—members of the CAC40—are threatening with layoffs, the bane of any socialist. And it’s just the beginning. Read.... Deep Trouble at the Core of the Eurozone.

The “Hollande Tax,” as it was lovingly dubbed, was aimed at corporate compensation schemes. While CEOs broke into a cold sweat as they pressed their iPhones to their ears to better hear the whispered strategies of their offshore bankers, a hullabaloo broke out in a totally unexpected area: le foot ... soccer, France’s national sport.

“Our best players, who are in a global market, will leave,” lamented Frédéric Thiriez, president of the Professional Football League. Players chimed in. Christophe Jallet, defender at the Paris Saint-Germain, one of the most prestigious soccer clubs in France called it “working for nothing.” Sports Minister David Douillet said that the measure would destroy professional soccer in France, that the industry would lose money, and that €600 million in tax revenues derived from it would disappear. Hundreds of millions more would be lost from publicly financed stadiums that would no longer attract large crowds. The top players would continue to earn many millions per year, but somewhere else. And French soccer clubs would die.

It hit home. Soccer is the sport of the people. Even the poor and the perennial underclass of North African descent and the otherwise discriminated-against proletariat, and even François Hollande himself, they all love soccer, and they all want France to win the World Cup in Brazil in 2014. But France won’t even be able to qualify without professional players.

Oh-là-là.

Wednesday morning, a little over a week after he’d trotted out his proposal, Hollande began to backpedal. On Europe 1, France’s largest radio network, Hollande said defensively, “We must find smoothing mechanisms for the income tax,” so that peaks, such as lump-sum payments, can be spread out over time and don’t fall into that bracket.

Also on Wednesday, former Prime Minister and fellow socialist Laurent Fabius came out to defend Hollande and at the same time whittle away at the Hollande Tax. “We are in an exceptional period, and it’s legitimate that those who are lucky enough to earn a lot of money pay an exceptional tax,” he said on RMC radio. “Afterwards, we can discuss different modalities.” Afterwards, because suddenly, it’s only going to be temporary.

The people have spoken. If it’s going to hurt soccer, the Hollande Tax is dead. And so the backpedalling process has started. But he has other problems. He dared to speak out against the austerity policies that German Chancellor Angela Merkel is imposing on the Eurozone. He wants stimulus and state-funded mega-projects instead. And he wants to renegotiate Merkel’s fiscal union pact that 25 EU member states already signed. But now word leaked out that Merkel roped in three powerful allies and lined them up against him—to keep Sarkozy in power. For that whole debacle, read.... Merkel’s Desperate and Risky Gamble.

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Shizzmoney's picture

Just give the soccer teams anti-trust exemption like here in the states.  Problem solved.

DevilsPrinciple's picture

I don't begrudge athletes and entertainers, their salaries are based 100% on the public's discretionary income, so if they suck, they get canned very quickly.

 

Ever see the tax breaks entertainers get ?You probably haven't but it's nothing short of amazing. It's no wonder why Hollywood panders to the left. It's in their own economic best interests.

EmileLargo's picture

J Kyle Bass has positioned himself for the fall of France. Boy if France goes down that really will be the end of the EU/Euro idiot dream. And who knows what will follow after that. But it is true that France is a totally unviable country the way it is currently constructed. If you have capital and invest in manufacturing in France, you need to get your head examined. Caterpillar found this out the hard way.

AnAnonymous's picture

Ah, US citizen favourite sports is kicking the can.

One doubts the French like soccer more than they love kicking the can.

bingaling's picture

This is pure propaganda . Attack the rich , they are the cause of all mans problems . How about reducing taxes of the common man in France ? a 20% TVA tax ,income taxes , gasoline taxes , cigarette taxes alchohol taxes , TV taxes , internet taxes, habitation taxes , property taxes, fees for required gov't transactions the list goes on and on in france . Seriously no one who makes under 50000 euros a year should pay a dime in taxes or fees  Thats the wool that has been pulled over the eyes of the everday person in france . The everyday person in france  pays that 75% already. That is what needs to be reduced.   At the same time tax the wealthiest and reduce the size of gov't(remove bureaucracy so small businesses can flourish) so the wealthiests taxes aren't over exorbitant .

AnAnonymous's picture

Yes, that is such a simple solution.

Cure an overconsumption problem by more consumption.

Dont forget at the end, to pledge to eliminate those who do not consume, they are such a drag on the global consumption balance.

Because, it is well known, in the end, that the cure for any ailment of US citizenism is more US citizenism.

bingaling's picture

Hey that TVA is on things people need to live rent food energy you name it - 20 % . So if you are for people living in caves and going back to the dark ages that is fine . Consumption is a part of life . We consume food - we consume energy . It sounds to me you would rather eliminate those that consume too much or have everyone in poverty . No matter what happens people will always consume it has nothing to do with the US . Show me a time in history where people werent consuming and I'll show you a time when people werent on the planet . I am assuming that your "intelligence" has brought you to the conclusion that humans should be eradicated because they are born hungry and need to put food in their mouths . Maybe I misunderstood you .If I did my apologies .

economics1996's picture

Isn’t it past due for the Germans to start killing French people again?  What’s it been, 67 years now?  Way past due.

Bossuet's picture

Hi,

"Hollandréou" dit l'excellent Mélenchon !

AnAnonymous's picture

The quality of the articles was not never high but it is worsening.

Kind of US citizen gift to be able to make anything worse, no matter how bad it was at start (check Libya, Afghanistan, Iraq for larger scale experiments)

What is all about?

This US citizen guy is a front runner. What are his legislative powers?

The article should say.

It is just a project among others. Or more than that, that is about to be voted?

It is funny how US citizens love to sell the idea that their candidates implement the platform they are elected on.

Exactly the same beef as another article, but this time, telling that this US candidate, would develop a different relationship to bankers and the rest.

I noticed something. This US citizen author started to report about the new wave of colonization being triggered by US citizens.

Since that article, it's been the outer space void.

Weird because one of this US citizen author gimmicks is to build thematics so to favour cross referencing and upping traffic in the doing.

If it is the lack of data, well, they do exist and are plenty.

Building on the new colonization wave being triggered would be more informative than selling the idea that US citizen candidates implement their platform once they are elected.

Tekrunner's picture

Do not be too sure about this. Many French people, and especially among the left, think that the salaries of top footballers are indecent. There's even a commonly used expression to describe them: millionnaires en short.

Oh, and not to mention that pretty much all of France was shocked by the utterly arrogant behaviour of its team at the 2008 World Cup.

Flocking swans's picture

Unleash the VOTERS!

Uchtdorf's picture

The French should have listened to Bastiat.

Nobody For President's picture

Just think, but for a hotel maid, it could be DSK doin' all the talkin'...

lolmao500's picture

Taxes putting the country back on it's feet! NOW THAT'S FUCKING RICH!

Taxes won't fix the goddamn corruption!

Heyoka Bianco's picture

Most of the best French players already play in other countries (half of the last WC squad did), because Ligue 1 is a Mickey Mouse league.

The downside is, professional sports are one of the very few (legal) ways the desperately poor youth, of most any country, can hope to become rich. Taking that away through taxes only hurts them, not the already wealthy who just shuffle their assets out of the country.

savagegoose's picture

fucken hypocrit socialists WTF !  there should be no exceptional soccer players in a socialist utpopia. no reward for excelling.

back to grind stone drones. its ok to fuck over exceprional  business men, innovators,  investor.,s but oohh laaa laaa wee fucken wee,. not the sccer players!

 

fucken turds

sun tzu's picture

Reminds me of the feudal days when the government ruled over the peons. 

Bunga Bunga's picture

Relax people. Under Roosevelt we had 94% income tax. Under Johnson it was 76% and under Nixon, Ford and Carter 70%.

balz's picture

Absolutely. Taxes are way too low now for the richest. USA was a great country when rich people paid a lot of taxes. That's how it works everywhere. It's time to raise those taxes.

sun tzu's picture

Under Wilson it was 1%. You socialist idiots are free to hand over 90% of your income if you really believe it will be put to good use, such as bailing out bankers and unions, bombing oil-rich countries, and creating a police state. Nobody is stopping you from paying more than you are required to pay.

Indrid Cold's picture

I thinks I'll switch to the winning team.. the FSA, the poor, downtrodden averageman.

eatthebanksters's picture

Yes, if you feel patriotic then go for it!

Barking Spaniel's picture

Does this proposed tax rate affect Corzine's French real estate purchase?

louisianagold's picture

“patriotism to accept to pay additional taxes to put the country back on its feet.”

 

Is this Joe Biden's cousin?

 

sun tzu's picture

Slavery is patriotism. Turn over all the fruits of your labor to the thieving politicians so they can buy more votes and give out lucrative government contracts to their cromies

HoofHearted's picture

If you speak French, this is easy to translate back into the French and is a perfectly reasonable sentence that any decent Socialist-minded Frenchman might say. My friends who own successful businesses would never say anything near this, but a lof of the French would certainly say this.

Andrew G's picture

If Hollande wasn't on the payroll of the elites and if he wasn't an idiot (both huge IFs), he could look into why bankers can earn multi-million packages in the first place, instead of 'fixing' it with some stupid tax. For example - fractional reserve banking, perhaps?

eatthebanksters's picture

I don't hate bankers,I hate corrupt bankers and there are more than a few out there...but, I hate corrupt, lying socialists who pray on the weaknesses of men to gain their advantage.  As long as these pricks foster the entitlement world, we will have wars and hate and greed.  When everyone that can take care of themselves does so and when we throw real criminals in jail (including corrupt bankers), the world will be such a mellower place. 

rsnoble's picture

I always thought the french were idiots. A 75% tax rate on 1 million bux proves it. Well..............the woman not shaving their arm pits doesn't help either.

Bunga Bunga's picture

And that proves that Americans were even greater idiots per your definition.

Hiking the top income tax led the US out of the great depression then. I know, that is something not many want to hear. But it is a fact.

 

 

 

DevilsPrinciple's picture

I'd like some of whatever this guys smoking

eatthebanksters's picture

when was this?  If you are referring to the great depression then I guess the prodctivity and empoyment that was a result of WWll means nothing...ok, whatever.  No govenrment has ever done anything that resulted in a profit.

Z Beeblebrox's picture

Are you saying theft isn't profitable?

Bunga Bunga's picture

Year / Top Bracket / GDP growth

1930 25% -8.6%

1931 25% -6.5%

1932 63% -13.2%

1933 63% -1.3%

1934 63% 10.9%

1935 63% 8.9%

1936 79% 13.0%

1937 79% 5.1%

F.Y.I  WWII started in 1939 (for the US even later in 1941)

I agree, that war production contributed to GDP. But that would have been impossible without hiking taxes, which went up during the war to 94%. WWII was just some kind of additional stimulus funded by taxes.

 

sun tzu's picture

That proves you socialist idiots are fucking retards. It was WWII that led the US out of the depression. The world's industrial capacity was destroyed and that created plenty of jobs in the US as did the lack of manpower since nearly every male between 18 and 35 was drafted. 

The majority of Americans are idiots though, as they elected that dimwitted moron Barry 0bozo and believed his socialist fairytales about free mortgages, gas and tuition

Bunga Bunga's picture

Probably you haven't noticed yet, that Socialism was introduced in the US already on October 3, 2008 ... if you can remember who was president then.

And please take a look at real data from that time, before repeating stupid myths from brainwash propaganda. 

 

 

 

Z Beeblebrox's picture

Socialism was introduced in the United States briefly in Article I Section 2, then more fully in Section 8:

"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; . . ."

Socialism is legalized theft - using words on paper in an attempt to legitimize taking things from people without their consent. It's thuggery dressed up in a costume.

Bossuet's picture

En matière de propagande et de lavage de cerveau, vous êtes les experts, il suffit de constater ce que subit, accepte une partie non négligeable de la population de vos états !

Les progrès sociaux se construisent dans la confrontation et pas autrement.

LowProfile's picture

Not without closing all the loopholes first.

Clawing back banker, trader & HF bonuses would be nice too.

 

streetcrawler's picture

You don't need to change the tax rates, just treat C-level execs like soccer players: if you don't perform, you get cut. If you're lucky enough to get a new job, it will be at a much lower salary with much less responsibility.

I don't begrudge athletes and entertainers, their salaries are based 100% on the public's discretionary income, so if they suck, they get canned very quickly.