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Mission accomplished? France's 75 percent tax

Ben McPartland · 18 Feb 2015, 14:38

Published: 18 Feb 2015 14:38 GMT+01:00

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France’s budget minister revealed this week, the takings for the much-maligned 75 percent tax rate on millionaires, suggesting the figures show that their objective was achieved.

The 75 percent tax on millionaires was one of the stand-out promises of Francois Hollande’s 2012 presidential election campaign.

But Hollande, who famously declared the world of finance was his enemy, came in for a lot of stick for the tax, which critics said would discourage international investors and send French millionaires fleeing for the exits.

The tax was quietly ditched at the start of the year with many in France glad to see it go, including the government’s own ex-banker turned economy minister Emmanuel Macron, who famously said it would turn the country into “Cuba without the sun.”

But this week budget minister Christian Eckert suggested it had been a success, as he revealed how much the tax man benefitted.

“The 75 percent tax brought in €309 million in 2014 and will bring in €210 million in 2015," Eckert told Les Echos.

But once the final calculations are made the overall figure "should confirm planned targets of around €400 million in total,” Eckert said.

The 2014 budget bill estimated the tax would bring in around €420 million to boost state coffers.

While the tax made headlines around the world its scope was actually pretty narrow with only 470 companies having to pay the top tax rate for around 1,000 employees earning a salary of a million euros or more.

But whatever the tax receipts are, critics say France paid the price in other ways.

“The story of the 75 percent tax rate is not positive at all,” economist Eric Heyer, from the French Economic Observatory, told The Local.

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"The effect of the tax rate on the public finances was only marginal and it had a negative impact on the image of France and its attractiveness,” Heyer said.

Others agreed: “The reform clearly damaged the reputation of France and its competitiveness,” Jorg Stegeman, director of headhunting firm Kennedy told the website Capital.fr.

A poll in early 2013 showed that although six out of 10 French voters supported the existence of a higher tax on the wealthy, only 21 percent thought it should be as high as the 75 percent proposed by the government.

And it continued to spark opposition from all walks of life. Most famously actor Gerard Depardieu quit France for either Belgium or Russia because of the high taxes, before later denying it. 

Ben McPartland (ben.mcpartland@thelocal.com)

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