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.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
JonNadler's picture

aux armes citoyens!!!

 

DoChenRollingBearing's picture

Oui, oui ,mon amis!

Good seeing ya around!

Diogenes's picture

The French are pikers. The US has had income taxes as high as 94% (1944-1945). The top tax rate was 70% or higher from 1936 to 1981.

Insideher Trading's picture

Tell us about the deductions too

ISEEIT's picture

And did you know that Unicorns are actually real creatures as well? It's true, but rich people just won't let you see them:)

Martin T's picture

France grand illusion...

http://macronomy.blogspot.com/2012/04/markets-update-credit-frances-gran...

"Europe will become united through its money or not at all."
Jacques Rueff.

It was in 1950 that French economist Jacques Rueff, made this prophecy. In 1958, he was financial counselor to President De Gaulle and was instrumental in designing France's successful 1958 reforms. We think his prophecy is about to be put to the test, given the urgent need of structural reforms for France. Our reference to Rueff and 1958 is by no means "innocent", France's current economic situation is a reminder of the dire situation France was in 1958 which saw the return of Charles de Gaulle to power.
The 1958 plan:
"Fiscal policies were focused on revenue and spending in order to bring about budgetary equilibrium. On the revenue side, so-called “sin” taxes were increased, tax loopholes were closed, and tax evaders were punished. On the spending side, social security benefits were abolished, universal handouts were minimized, and industry subsidies were reduced or eliminated."

How to play the upcoming widening of French spreads...

http://macronomy.blogspot.com/2012/08/france-playing-nonchalance-oat-bun...

Walt D.'s picture

..Et si la Cour Supreme des Etas-Unis en avait?

LMAO's picture
French Constitutional Court Strikes Down 75% Millionaire Tax, Finds It "Unfair"

That's what you get when you have millionaires decide what's fair for them.

Sheer logic dictates the outcome.

IridiumRebel's picture

If that were the case, the legislation would have never been proposed in the first place. I reccommend you leaving us here and you grabbing a nice torch with you and your buddies and going down to a rich neighborhood and hate on rich people and achievement there in person. You should get some nice attention. 

Tekrunner's picture

I shouldn't be surprised that ZH would try to paint a decision about taxes as negatively as possible, but it's still disappointing. The court didn't rule that the tax was unfair because it's a 75% tax, but because it would have applied to individuals, instead of households (like all other income taxes in France). Hence the badly worded comment in the Reuters report : a household where someone makes 1.1 million a year and no one else has any income would have had to pay 75% on the top 100k euros, whereas in a household where both partners each made 999k a year the 75% bracket would not have applied. The court ruled that the first household would have been unfairly penalized compared to the second one.

You can rest assured that Hollande will submit a new version of that law.

BraveSirRobin's picture

This is true. All that needs to be done id to modify the law. However, it gives oppenents another chance to block the change and thus scrap the whole thing. Given its negative economic effect, perhaps reason will prevail.

As background, I think income taxes a inherently evil and make us all a slave to the state. It is amazing that after fighting a civil war in this country to eliminate the practice of private slavery, we turned around an imposed a system of public slavery.

foxmuldar's picture

When all the Millionares leave France, you can bet they will lower the tax threshold to 750,00 or maybe even 500,000. Socialist only know one thing. Stealing from those who earn and giving to those who sit on their lazy asses providing nothing to the economy or society. Were seeing this today here In America. 47 Million on food stamps. How many of those voted against Obama. I'll bet less then 1 percent. 

I am on to you's picture

How does that Paradigme, comply, with all the Hedgefunds, living in tax haven on Cayman,i remember a number of 35.000,and million of sister companys,spread all over the globe,in taxloopholes.

 

So forget all this crap,when the rich leaves,they already left,in terms of tax,so it dont work.

47 million,how many Chineese got their jobs?????And thats only US,any where you cant swap unemployed to Chineese,i dont like Obama,but he didnt move the jobs.

Give the rich a Kindergarden???At the southpole,their the can cool it!On the rocks!

godzila's picture

Absolutely - Tyler completely missed the point on this one. The law was not deemed unconstitutional because of the taxation rate but because of the way it would be applied. BIG difference. I really hope to see some update on the matter.

Archduke's picture

uh, can you not read?  Tyler quoted that bit verbatim.

you're projecting other's lack of discernment on the author.

godzila's picture

Well I woud have expected a little more research in the matter (which, turns out, is interresting). I'm convienced that ZH doesn't quote verbatim any bogus piece of propaganda that heppens to hit the newswire...

At the very least an update to the post is warranted - I have tried (as many others, presumably) to reach out to ZH but I guess nobody's home.

Jeepers Creepers's picture

The excuse I get so tired of hearing to justify these excessive and immoral taxes are "the rich have loopholes, so we need to make the number as high as possible!". 

Then close these mystical loopholes, don't keep raising the tax rate. 

FYI, as someone who is "rich", the loophole argument is absurd. With an AMT, I don't even qualify for normal deductions like a child tax credit.  My available "loopholes" are basically charity and a mortgage deduction.  I pay more to Uncle Sam than I spend on my house, children, food, clothing, retirement, car, fuel etc.  I'm sure that's what our Founding Father's envisioned for our Country when they fought the British.  That we'd all be slaves to the State.

robertocarlos's picture

The govt should take 10% tax at most. Of course then there will be 5 levels of govt each taking 10%.

Waterfallsparkles's picture

There already are.  When you consider Property Tax, Corporation Property Tax, Sales Tax, paid to the State.  Gas Tax, Phone Tax,  Energy Tax on Gas and Electric bills, Vehicle registration Tax, etc.  Then you have all of the fees.  Driver Liscense renewal, emmissions fee, permit fees, vehicle tags, Corporation registration fees, etc.

Bollixed's picture

You forgot the $3,400 a year I pay in HOA fees.

Oh wait, that's a cost of livng in an area where services rendered are outside of governmental scope.

I still have to pay the other taxes you mentioned, so I got that going for me.

Where's my bailout...

andrewp111's picture

I guess Hollande wasn't able to replace the members of the Court with Socialists quickly enough. Give him time.

Pharming's picture

I have faith that this "ruling" will not just "go away".  France is still helping hold up the Euro.  It won't be too long when those that feed off the government start burning France to the ground.  I'm sure the big world govt guys/gals would love to see a little more split in the classes.  That's the way to keep the wealthy running and the poor throwing rocks at the Mercedes.  There is a big population of immigrants that do NOT adopt France's culture.  They bring their own culture with them.  They will see to it that the streets will be burning.  Smell that?  Burning tires and the sweet smell of Sharia Law.  Ugh.

shovelhead's picture

You can't celebrate diversity without a fire and a sing-a-long.

Pass the s'mores.

Peter Pan's picture

The reality is that the accumulated debt of nations and many individuals is unsustainable.

The bigger reality is that even if the excess debt was burnt off, many economies are still unsustainable because of the unfunded nature of their politicians'promises and their citizens' expectations.

All of this is the result of governments rather than markets deciding on solutions. So as long as ignorant, greedy and incompetent politicians persist with the assistance of clueless central banks, there will be no solution, just a bigger and bigger societal explosion down the track.

Pharming's picture

The quadrillion dollar question is WHEN is the bigger societal explosion down the track coming?  Will we want to be as far away as possible from "organized" society?  

I'm not worried about asking a paranoid question like this...I'm already on watch lists.

Peter Pan's picture

I agree that we would want to be as far away as possible from "organized" society when the societal explosion takes place, but I fear that "organized" society and less prepared neighbours will come looking for us anyway.

Archduke's picture

if or when chaos comes, you will only survive by virtue of an organized society.

the question is what level of organization is appropriate with resource density?

how local should should it be?  a family clan? a kibbutz?, a village? a city-state?

cosmyccowboy's picture

wee wee wwweeeeeeeeeeeee

IridiumRebel's picture

Laffer Curve anyone?

I am on to you's picture

I had a dream,i dreamt,France, was Cayman Islands,then i woke, and realised, its still English!

 

Who in their wildest nightmare,would have thought, the Rich would pay tax,thats what they have the imbecils to do!

They crawl into, any taxloophole availble,even, if its the Arse ,of the pope,or Rumpy or Lastrate!

Strange, it hasnt come to the point yet,that to eradicate poverty,just kill the poor!

Are we all, in it together, or yes!200.000 dollars for a facelift with a Branson Virgin,gota hurt to be rich!!Capitalism or socialism,same club owners!

Mad Muppet's picture

Note from the Frog Govt: Pleeze, evil riche people...we take it back. Pleeze come back and let us tax you at a lower rate! We didn't mean it! If you bring back your nice money, we'll let you keep some, for now at least. We love you and your dear, sweet money!

rsnoble's picture

Damn pesky constitutions!  What were they thinking when they made those things!!! Mommy!!!!!

pcrs's picture

It's all just arbitrary plunder, wether 1% or 75%, starting from 100k or 100M. It is handing over the fruits of your labour, not for a good product or service, but because of the threat of force by the elites. This while you had to strictly adhere to voluntary relationships when you were making the money. It would not be accepted if you went around taxing people, or euphemistically:asking them for fair share contributions.

Bicycle Repairman's picture

Unconstitutional?  Is that some 20th century word?  Can rich people still use that word?

Dre4dwolf's picture

75%? Hahaha thats not a TAX thats just kicking the rich people out of the country with their money.

If I was going to be taxed 75% I would honestly just packup and leave, in-fact I would leave just for them suggesting it.

ISEEIT's picture

Oh.... The horror! This must be the final straw then! These corrupt and incompetent courts clearly do not serve social justice and so must be reformed. Gaze aghast at the injustice rendered by these few upon the masses, these robed representatives of the rich and privileged.

Such an outrage of defiance against the people must be met with a firm and truly resounding response.....

REVOLUTION BABY!!!!

WAR BITCHEZ!!

GOD, SAVE THE KING???

Rustysilver's picture

After some tries the Income Tax was permanently established in 1913. The greatest motivation was to get a revenue stream that was not dependent on alcohol tax. A PBS series on Prohibition clearly demonstrated that. Once the income tax was in then the Prohibitionist began their work.

France levies income tax on household not individual.  I don't understand the nuance. Is it like married filing jointly.

 

Royal Wulff's picture

The rich pay more even if the tax rate is flat.

Face it, the statist definition of fairness is not based on how much you pay, it's based on how much you're left with.

MFLTucson's picture

Here is one that is unfair. Millions of lazy blacks and low life whites have lived off this government for decades and contribute nothing to maintain the infrastructure they use. That is where this needs to be directed. Get these fucking bums back paying into the system and get rid of the drain on society and the country will return to fiscal health.  No work should equal no food, no healthcare. End of discussion unless you are dealing with children under 18, severe disability, illness or old age. And if you do not file taxes, you should not be allowed to vote.

smiler03's picture

Will those who die from starvation (while their kids eat??) qualify for hygienic disposal of their bodies or will they be left to rot in the streets?

rsnoble's picture

Well who are the enablers?  Problem is they created a mess so huge we're in real trouble now.

smacker's picture

It's noteworthy that the cancerous socialists across the English-speaking world are in lockstep using the same phony rhetoric to steal from any group they don't like (usually defined as anybody who doesn't vote for them).

jonjon831983's picture

Don't listen to them, it's a trap!  Don't go back!

 

Really though, if enough countries start driving for the same thing and tax havens are being broken down by foreign influence then the rich will start to run out of places to hide.

falak pema's picture

froth and bubbles; they will change the rules of its application, its only a mirage this tax measure. 

The 75% tax measure is symbolic. Its socialist demagogy at its worst and Hollande needs his butt kicked for his false smoke n mirrors play to please his left electorate who put him there.

THe real program of France is to break down its government spending currently in leviathan mode. Painful for a country that has been living off that teat since Napoleon; both left and right. But that's the legacy of Globalisation and there is no going back; its march with time or die. 

In the next five years we will see big changes to Eurozone integration, to fiscal harmonisation, to productivity rise and longer work hours in France to align itself with Germany. They have this obsession; Merkel's world; and all CLub Med now has to tighten belt, suffer in silence as the race of European survival is on. No energy, hi-costs, no way out but from innovation and paradigm change.

We are in tipping times and this is a global race. 

First world blues as  the financialised world now gapes at the gaping hole they have made  in land of fiat hopium: "Did WE really do that?"

You bet! Guess whose going to fall into it? 

Archduke's picture

perhaps instead of 75% tax, it should be 75% mandatory investment in industry, infrastructure, health and ecuation.

but who are we to replace the invisible hand?  in an ideal orderly market those riches are already parked in productive assets.

 

then again maybe not.  the world is not ideal.  so redistribution's role is to coax back on the right track.

 

I would say the best we can do is insist on local development funds, and prohibit rentier type assets that offer no value-added.

that is if we should have any tax on profit at all. it seems unfair to confiscate such a massive chunk, and we should trust the

market to be a more efficient re-allocator of the monies than govt.  we only need to gently steer it in the right areas.

long term, this should be a win-win.

 

 

Archduke's picture

or even something in between, a bit less radical.  it seems to me a lot of corruption, nepotism,

and shameles pork in govt comes from the fact that officials allocate funds where they see fit. 

 

maybe if govt's principal role is to draft projects, proposals, and solutions for different sectors,

and serve as a double auction house to match bid tenders from suppliers and funding offers

from investors, by which I mean we the tax paying stakeholders and our tax dollars.

 

each of us in turn gets to choose where we want those tax dollars allocated, to which projects.

dead end losing projects get quickly defunded. good projects either pay for themselves or have

enough philanthropic goodwill and democratic support backing them.  a danger is it does appear

to break with 1 person == 1 vote, being more akin to 1 dollar = 1 vote.  we need to focus on

a way to grade priorities by weight that don't encourage the tyranny of affluent majorities...

 

perhaps sectorial quotas, but we have to avoid 5-year style central planning. maybe sectorial

auctions in collective priority weighed by 1-person=1vote ballot. where choice reduces if you

stray too much...

 

in short, something between liquid democracy and participative markets.

something that makes each of us a stakeholder and holds officials to account.

 

check out:

 

http://en.wikipedia.org/wiki/Delegative_democracy

http://www.liquidfeedback.org