Paris seeks alternative to 75% tax

by Scheherazade Daneshkhu, FT.com  |  published on March 3, 2013

france

France’s Socialist government is considering replacing its stricken 75 per cent top income tax rate on earnings above €1m, with a 65-66 per cent rate on households earning more than €2m.

The proposed new rate is working its way through the National Assembly as part of budget measures aimed at redressing France’s growing public deficit.

But it has come under fire from Christian Eckert, the Socialist head of the assembly’s budget committee, who said it did not fulfil President François Hollande’s emblematic manifesto promise.

In an interview with Le Monde newspaper published on Friday, Mr Eckert said: “It seems to me that we are in danger of losing two symbols: that of incomes above €1m and that of the 75 per cent rate, which will be dropped to 65-66 per cent.”

The finance ministry has neither confirmed nor denied the proposed new rate.

Mr Hollande’s 75 per cent rate was struck down by the constitutional council on New Year’s eve, just before it was due to come into force. It said it was unfair to apply the rate to individuals, not households, as is the norm under French income tax rules.

However, simply imposing a €1m threshold on households could pose a political problem, since the number of people affected would rise from about 1,500 to more than 10,000.

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