France Makes a Mess of Socialist Tax Policy to Set Rate at 75% for Millionaires

Bad Policy, Bad Implementation and Just Plain Bad

France has a problem which is the opposite of the United States.  In France government really does spend too much, government spending as a share of GDP is higher than almost any other advanced nation.  Add in a huge budget deficit and one gets the perfect storm to drive the economy onto the rocks. 

France recently elected a Socialist to the Presidency, partly because the center right government of Nicolas Sarkozy was so bad.  And part of the platform for the Socialists was the implementation of a 75% marginal tax rate. This policy was a complete sham.

The 75 percent rate was always a symbolic political gesture, as Mr. Hollande himself has acknowledged. It was to expire in two years and would have applied only to annual income above 1 million euros, or about $1.3 million, and so would have affected no more than a few thousand taxpayers.

Tax revenues from the measure would have reached just a few hundred million dollars, little more than a bucket of water in France’s deficit sea; the budget deficit is about $112 billion this year.

And now, thanks to a court ruling it is in complete shambles.

The council ruled that the tax was unfair because it would have applied unevenly to different households with the same combined income. A couple making a combined 1.5 million euros a year, for instance, would be exempt from the tax so long as both partners earned less than 1 million euros individually. If one partner earned more than 1 million euros, however, the couple would have been required to pay the 75 percent rate on their combined earnings of more than 1 million.

Of course, the Socialists who run France will not take the easy way out, and abandon this stupid program which accomplishes nothing except to inflame the extremists and highly disappoint those who would like France to succeed.

Prime Minister Jean-Marc Ayrault quickly pledged that the government would reintroduce a revised version of the tax for next year to address the criticisms of the Constitutional Council,

So yes Conservatives, you do not have a monopoly on stupid tax policy.  There is plenty of idiocy to go around.