French Constitutional Court Strikes Down 75% Millionaire Tax, Finds It "Unfair"

Tyler Durden's picture

In a crushing blow to socialism, wealth redistribution and purveyors of the "fairness doctrine" (as defined here first) everywhere, the French Constitutional Council ruled on Saturday that Hollande's brilliant idea to tax millionaires at a 75% tax rate - a move which has since seen numerous millionaires leave France and move to Belgium - is unconstitutional. Per Reuters, the Council ruled that the planned 75 percent tax on annual income above 1 million euros ($1.32 million) - a flagship measure of Hollande's election campaign - was unfair in the way it would be applied to different households. Which is ironic because just like in the US, so in France, the selective wealth redistribution campaign waged by the government against the "rich" (which have yet to be properly defined: those making over $250K? Over $400K? Over €1MM?) was based on the premise that it is only "fair" that the rich contribute more. Turns out fairness in the eye of the government beholder, was unfair. But the move begs the question: would the court have struck down the law had it been a merely 50% tax hike? And if the income cut off was, say, €500,000? The far bigger question is, and has been in this year of encroaching socialism, just what is the definition of "rich", what is the definition of "fair redistribution", and where do the two coincide. Finally, how soon until the US Supreme Court weighs in as well on any final Fiscal Cliff tax hike proposal which, like in France, will see the "rich" pay an abnormal share, and will that too be ruled unconstitutional?

From Reuters:

While the tax plan was largely symbolic and would only have affected a few thousand people, it has infuriated high earners in France, prompting some such as actor Gerard Depardieu to flee abroad. The message it sent also shocked entrepreneurs and foreign investors, who accuse Hollande of being anti-business.

 

Finance Minister Pierre Moscovici said the rejection of the 75 percent tax and other minor measures could cut up to 500 million euros in forecast tax revenues but would not hurt efforts to slash the public deficit to below a European Union ceiling of 3 percent of economic output next year.

 

"The rejected measures represent 300 to 500 million euros. Our deficit-cutting path will not be affected," Moscovici told BFM television. He too said the government would resubmit a proposal to raise taxes on high incomes in 2013 and 2014.

 

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.

 

UMP member Gilles Carrez, chairman of the National Assembly's finance commission, told BFM television, however, that the Council's so-called wise men also felt the 75 percent tax was excessive and too much based on ideology.

 

Ideological issues aside, the Hollande tax hike was supposed to provide cover for even more French government spending - remember: under socialism the government believes it knows how to spend the money best... and most. That this tax hike rejection happened even as France was increasingly under the microscope of various entities warning that the French budget is unsustainable, will only exacerbate fears that the government will drift even more into the red.

Which then begs the question: once the SNB stops recycling the EURs it buys into French sovereign bonds, the only driver of low French yields in the past 2 quarters, how will France preserve the Ponzi-offset illusion that rampant socialism is not on the radar screens of bond vigilantees everywhere.

And will 2013 finally be the year in which the focus finally shifts from the European bailout addicts to the European enablers, who are just as insolvent but who have been using the distraction of the PIIGS quite effectively for the 3rd year running?

* * *

The good news: Obelix can finally return to Gaul.

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bank guy in Brussels's picture

The US Constitution - ignored and dead, I know - actually does make Congress quite supreme over the Supreme Court

It gives the US Congress unlimited power to remove any and all federal judges, including the Supreme Court, for mere lack of 'good behaviour' ... which Congress alone decides.

Such bad 'behaviour' can be simply not honouring the Constitution or basic human rights or common sense. US Constitution says impeachment accusation of house, and trial by Senate.

Impeachment of the US Supreme Court judges would start in the House Judiciary Committee, headed by John Conyers of Detroit ... whose wife was promptly arrested and jailed at the start of Obama's term in office in 2009, when the foolish Mr Conyers thought he would start saying things about some of the corrupt judges who were jailing all the innocent black people ... Conyers was yet another American duped by the criminal Obama.

And regarding the US states as a 'check and balance' on the US Supreme Court ... seems that was tried in 1861, and 600,000 Americans were then killed to establish US nationalist imperialist 'No You Can't' policy

In the EU, European countries have the explicit written right to secede from it ... a shame they forgot that in the US Constitution

CynicLaureate's picture

In 1861, Texas didn't have nuclear weapons.

Spastica Rex's picture

Well, at least the makers in the USA now have a place to expatriate to. I hear that both the cheese and wine there are excellent.

dick cheneys ghost's picture

With regard to the US Supreme Court, before we define 'Rich' let us first define 'Empire', 'PetroDollar' and 'Reserve Currency', because in reality, everything else is just masterbation

djsmps's picture

Can we strike down Obama's executive order giving Congress a raise?

Water Is Wet's picture

LOL.  The "That's Not Fair" defense of rich people by a national court?!  I'm shocked.

surf0766's picture

When does the French Constitutional Court get removed?

Jayda1850's picture

the next German invasion

foxmuldar's picture

Our Problem here in the US is now that Obama has four more years to force feed his Socialist programs down our throats, he also gets to stuff a few more marxists on the Supreme court who will do what he commands. We ain't seen nothing yet. Our goose is cooked. 

Landrew's picture

You seem to be TAX stupid. The rich of America do NOT pay standard INCOME tax! The rich pay LONG term CAPITAL GAINS taxes at 15%! 99% of us pay INCOME tax! The truly rich pay very little with respect to total income. With that said I would IF we are not to eliminate the loopholes gladly pay a flat tax via Steve Forbes plan. The rich gain the most in benefit from the backs of working people. It's time to treat companies that move and pay 13% in Ireland Microsoft as an example as FOREIGN companies and tax them accordingly! Let's see how property rights are treated in China companies that turn their backs on America! WE are soft on these ALIEN companies like CATERPILLAR! 

Waterfallsparkles's picture

I agree that we should Tax Overseas profits.  That loop hole needs to be closed.  That alone could balance the Budget.

If they want to be a US Company then all revenue, no matter where it is earned needs to be Taxed in the US.  If they wish to move off shore then they should not be allowed to Register and have their Stock Traded on the New York Stock Exchange or the Nasdaq.

BraveSirRobin's picture

Yes, let's delist all foreign companies. While we are at it, we can deny all foreign entities from doing business in the US. Then, we will not need to worry about taxing foreign earnings of US companies because there will not be any, as the foreigners will have taken it all, or the US companies will just spin off their foreign holdings to avoid being closed down or seized by either the foreigners of our own rapcious government. 

BTW, even taxing 100% of all overseas earnings by dometic corporations will come nowhere close to closing the budget deficit.

Please think and do some homework for Pete's sake.

Why have people suddenly become so hostile to profit? Without profit, everything collapses. The problem is not profits, but rather the heavy hand of a facist or corporatist government rigging the system to pick winners and losers to reward obidience to the state and self-dealing at the expense of everyone else. Such profits are not naturally earned and are immoral, but let's not paint all profits and those seeking profit as immoral or lacking in virtue. Let's focus on the problem.

Archduke's picture

or conversely, tax flights of capital overseas.  it really shouldn't matter at all if any business makes a profit.

good for them if they do.  but profit or loss, any transfer of capital out of the economy needs to be taxed.

BraveSirRobin's picture

"You seem to be TAX stupid."

Me thinks you be the one inflicted with tax stupidity.

To earn capital gains you must have first earned, saved and invested ordinary income, which was taxed in the first instance. Capital gains taxes are, therefore, a form of seondary or re-taxation of already taxed income.

As far as foreign earnings, these companies produce income in other countries and pay taxes in the jurisdictions as imposed. Why should additional taxes be paid to jurisdictions with no hand in the production of those earnings? Perhaps if we did not have a punitive tax system it would make sense for companies to repatriate earnings. If imposing taxes on capital flight is destructive(no one wants to invest in a roach motel where you can put capital in, but you can't take capital out), then imposiiton of taxes on bringing capital in is even stupider. As is, the potential return on investment does not justify the tax loss imposed by our system.

Why don't we all start thinking in terms of less government and more freedom? 

Chaos_Theory's picture

Anyone who thinks it's a revenue problem needs to go to the Beltway for a week.  Walk around the areas where major departments are; watch the mandarins preen and enjoy long cafe lunches, coming to work at 9 and leaving at 3 to avoid the beltway traffic's worst times, and generally acting as if they're the lords of the manor.  Places like McClean, Reston, Herndon, Bethesda, Georgetown, Independence to K-Street area, Pentagon City, Potomac, Rockville, etc. Watch them take their annual luxury cruise, travel to Europe, and just enjoy their month of paid vacations while the foolish private sector serfs are lucky to get two-weeks.   

Once you actually do that trip, not as a tourist, but in investigative journalist mode, you'll know the bitter truth...no level of taxation can satisfy the desire to fund the mandarins, not too mention all of the "freebies" Americans have been bred to expect as their natural rights, or even more tragically, the actual critical functions of a just government. 

In other words, we're fucked the minute the world gets the joke and dumps the Dollar-standard and U.S. bond auctions become even more a farce. 

RKDS's picture

And yet, if I buy and later resell anything, I get to pay income tax all over again and that's just peachy keen with the poor victimized rich assholes who control the very government that they cry is unfair to them...

Archduke's picture

with the caveat that most institutional funds are injected tax-exempt throught 401Ks, RRSPs, etc.

unless you're a mattress stuffing mobster, there's very little double taxation at that level.

 

 

Jack Sheet's picture

@Landrew

+100

The Elite themselves own NOTHING taxable, no car, no real estate, no stocks, not even the coat on their back, it is all in trusts in Belize or Liechtenstein. It is the middle class that is going to get taxed into oblivion (Lindsey Williams).

Racer's picture

The rich already pay an abnormal share... as in they use all the tax loopholes they can to pay as little as possible

Joebloinvestor's picture

The real answer is to change the tax laws and formulas so that the more you make the less the TAX RATE is.

You would still end up paying more in tax the more you made, but the rate would be less.

It would actually inspire people to claim more income and pay less of a tax rate on it.

linrom's picture

They should stop pretending that rich pay any taxes at all.

Insideher Trading's picture

Some millionaires are just plain ignorant. Take for example Katt Williams...owes $4 million back taxes to the I.R.S he can't pay. Yet he supported Obama who promised to raise his taxes even more than what he's paying. What kind of sense does that make? And it's not like he's an anomaly, almost every celebrity with tax problems supported Obama. Let me know when someone has figured that one out.

 

StandardDeviant's picture

I think you answered your own question, back in the first sentence there.

Waterfallsparkles's picture

Warren Buffets Company also owes a substancial amount of taxes to the IRS that he refuses to pay.

linrom's picture

All economies are about re-distributing wealth from the poor to the rich. I guess that's fair?

Salon's picture

Lol.

Obama? Is that you?

Insideher Trading's picture

Yes it is fair.

Do you think it's realistic that everyone can be rich?

linrom's picture

No! That's why they should pay taxes, and you and I should not!

That's what fair means.

Anusocracy's picture

Fair means you get what you deserve. No more, no less.

Segestan's picture

The latest gig to make the government look ... Fair

Atomizer's picture

Big Global Picture from the Insane Asylum: If you proles would just work for free, we’ll stop raising taxes and promise to offer you free government necessities.

/sarc

JungleJim's picture

Wow ! Now I don't have to immigrate to North Korea !

ISEEIT's picture

North Korea is and has been a globalist laboratory. Think MK Ultra but with much larger numbers.

Sean7k's picture

People need to understand that the income tax in America was instituted as soon as the FED was created. Why? To insure that any debt that was created could be confiscated. This is the true purpose of the income tax- it is a wealth transfer mechanism. 

Consequently, there is NO good reason for an income tax unless you are one of the Elite. They have merely done a great job convincing everyone of the opposite. 

Want to attack the foundation of Elite control? Easy, re-order your life to minimize taxes, FED currency and War. Stop being soldiers- we can't defend our country from home? Black markets deprive governments and banks of money and taxes. Fight for the end of legal tender laws. Stop supporting the legal system. 

Make it your New Year resolution.

Max in St Moritz's picture

 

 

This is completely incorrect.  Just another example of libertarians living in a utopian bubble of disinformation and unrealistic ideologies.

The nations first federal income tax was in 1862, and was enacted to help pay for the cost of the civil war.  If you'd like the TRUTH, please Google: The Act of 1862.  

Typical libertarian.  

 

Atomizer's picture

BASE

Just give me one more stimulus injection. I promise to reform my spending habits & repay all my debt obligations thru our new modeled slant in creating jobs in the US.

 

 

Edit: This was the link I meant. The ending explains all

“Major crisis still ahead, past one was minor”

Sean7k's picture

Actually Max, it was in 1861, but it was repealed. However, The tax of 1862 was not an income tax as we know it today. See Supreme Court decisions, especially Pollack, that effectively elimnated personal income taxes. The Revenue Act of 1862 (July 1, 1862, Ch. 119, 12 Stat. 432), was passed by the United States Congress to help fund the American Civil War. The Act was signed into law by PresidentAbraham Lincoln, introducing the first progressive rate income tax to the country.

The office of the Commissioner of Internal Revenue was established,[1] with the Act specifying that Federal income tax was a temporary measure that would terminate in "the year eighteen hundred and sixty-six"). Notice the temporary part?

It was not until the sixteenth amendment, which followed the establishment of the FED charter, that we see a serious and consistent personal income tax in America. Nice try Max. 

Typical disinformation troll.

 

Freddie's picture

A tax to fund Americans killing other Americans in 1861.   The libs in sh*t Hollywood love making a film about Abe because he helped kick off the police state and tyranny.  F Hollywood and F TV.

Max in St Moritz's picture

 

 

WTF?

Your entire rebuttal proves MY point, and negates YOURS.  Perhaps I should have called it the REVENUE Act of 1862, rather than just the Act of 1862???

Federal income taxes did NOT start with the Federal Reserve, which proves your original point WRONG.

And the spirit of the taxes was NOT to confiscate debt; it was to pay for the cost of the civil war.

How can you possibly claim that I was wrong?

The truth is the truth, despite what you want it to be.  You're like Karl Rove, bro! 

 

 

Sean7k's picture

Because I never said it was the first income tax, nor referenced the history of taxation in America. I merely stated that the personal income tax followed the establishment of the FED. Which it did. While there have been many taxes established over the years, for example, head taxes, usually on personal property, the sixteenth amendment was the beginning of the present era of personal income tax. 

Nor do you question the relationship between this tax and the FED. Please read the Creature from Jekyll Island. You can even consult the questionable status of whether this tax amendment was ever actually enacted. 

So, you have done nothing to negate my point. Your point was immaterial to my post. Typical of all your posts- Max Fischer. 

 

Max in St Moritz's picture

 

When you begin to squabble over semantics, that's the first sign of losing the bigger argument.

Anyone who would have read your post without my rebuttal would have believed the Fed "instituted" federal income taxes and that it was used to "confiscate debt." Those are your words and it's pure libertarian disinformation. No one would have understood that "debt" was actually another word for taxes. The truth is, income taxes had been levied several times before 1913 but without a centralized currency and a centralized bank it was virtually impossible to govern. 

The true reason why the Fed was able to make income taxes permanent is because, for the very first time in American history, we had a central bank that was in total control of a universal, national currency and could dictate that taxes be paid in that specific currency. Before this time, America was full of various regional currencies issued by regional banks which created financial chaos when trying payoff long distance debts.  So long as the Fed is in control, your labor will always be converted into US dollars so that you can pay your taxes/debt to the government.  Before the Fed, it was difficult to levy taxes with hundreds of competing currencies, most of which were not trusted by citizens who lived in different regions.  How much is one hour of your labor worth in one region's currency versus another regional currency?

Having one currency in one nation, governed by one bank is - despite all the libertarian carnival barking - the most efficient system to have.  In the spirit of Churchill, central banking is the worst sort of banking except for all the others that have been tried.

ZeroAvatar's picture

Wow!   Those are some well-scripted talking points!   Troll much?

Sean7k's picture

The US has had three central banks. The First National Bank, which was an excuse to fleece the people, where nine elites were to provide one tenth of the capital and the government (the People) the final tenth. Only the final tenth by the government was ever contributed. The Bank went on to expand currency beyond its' value and its' charter was revoked. 

The Second National Bank, a creature of the War of 1812 and excessive government debt, did exactly the same thing, being responsible for the Panic of 1919- our first depression. Its' charter was revoked under Jackson's presidency and was the last time the US had ZERO federal debt. 

The Current FED is the third incarnation of the Central bank. This time, through the use of the income tax and the creation of massive debts through Fiat currency and given a hundred year reign of terror, we are where we are today- in possession of more debt than can be paid or even taxed to cover. 

The transfer of wealth has been almost complete. 

Why you think this is all worthwhile when all we need is a central clearing system- something that was quite successful in New England banking, without the tyranny of the the FED is beyond belief. To ignore the debasement of currency, debt accumulation and capture of interest rates- all placed in the hands of international bankers makes you what I said in the first place- disinformation troll. Looks like most of the readers agree.

TWSceptic's picture

In the spirit of Churchill, central banking is the worst sort of banking except for all the others that have been tried.

 

A completely free market in banking has never been tried. Central planning, like all collectivist ideas, is not required to accomplish a strong economy and more prosperous society. In fact it accomplishes the exact opposite.

ISEEIT's picture

And you 'bro' are like MSNBC.

 

Optimusprime's picture

It was also unconstitutional, and eventually was ruled as such.

VonSalza's picture

A great day for the 1%