France Introduces Huge New Tax On Millionaire Salaries
Americans: If you think your taxes are high, wait until you hear about what’s going on in the rest of the world.
A French high court approved a measure proposed by French President Francois Hollande that will require employers to pay a 75 percent tax on all salaries above $1.4 million.
The policy is a temporary one that will be implemented alongside spending cuts as France attempts to balance their budget. According to France’s Economy Ministry, the law will apply to all salaries paid out in 2013 and 2014.
“The companies that pay out remuneration above 1 million euros will, as expected, be called upon for an effort of solidarity on remuneration paid in 2013 and 2014,” the Ministry said.
Note that the tax is being applied to employers, not earners. The French Court rejected an earlier proposal from Hollande calling for individuals to see a similar tax extracted from their personal incomes. The court gave the measure the green light after a revised proposal placed the burden of the tax on employers.
The total amount a company can be taxed for the salaries is capped at 5 percent of the company’s total revenue.
President Hollande announced his initial plan for the tax in February of 2012 in an attempt to appeal to his socialist voting base. Hollande famously noted during his last campaign that he “didn’t like” the rich.
BBC writes that football clubs, which typically have a handful of employees and players paid above the 1 million euro mark, are protesting the tax. Even still the majority of polls show the French public supports the temporary measure.
“Polls suggest a large majority in France back the temporary tax,” the BBC notes. “Unlike many other countries in Europe, France aims to bring down its huge public deficit by raising taxes as well as some spending cuts.”