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ORIGINAL FRENCH ARTICLE: http://www.humanite.fr/suppression-...

by Eugénie Barbezat

France drops its 75% tax on very high earnings

Translated Monday 5 January 2015, by Anne Sanders

Saturday 3rd January 2015
This tax was pledged by François Hollande in his election manifesto, and is paid by businesses on salaries above 1 million euros earned by some executives. It is now in its final weeks.

This “exceptional contribution to social funds”, is paid on salaries awarded to executives, on the portion where they exceed 1 million euros. It was brought in at the end of 2013 (following the rejection of a first draft at the end of 2012 by the French Constitutional council) and was intended to be a temporary measure for just 2 years, on earnings in 2013 and 2014.

Businesses subject to this tax have until 1st February to pay in full.

It should be recalled that Francois Hollande’s flagship policy before the presidential election was the launch of a “fiscal revolution”, as advocated by the economist Thomas Piketty, by merging the CSG (the general social security contribution) with income tax, in order to create a genuinely progressive civic tax for all.

During a visit to London in early October, the French prime minister Manuel Valls confirmed that this tax would not be extended and would therefore disappear at the beginning of 2015. This tax was Francois Hollande’s key manifesto pledge, but it had been criticised in business circles and also by football clubs. “My government is pro-business”, claimed the French prime minister to the City of London.

At a time when minimum social benefits in France are frozen, it is surprising that a so-called “socialist” government should not attempt to limit the highest incomes. This especially so, given that the gap in earnings between the richest and poorest continues to grow. This situation is denounced by an increasing number of economists who point out that this gap is extremely detrimental to economic growth.

(See our article : Explosion of inequality: An end to the theory of trickle-down economics)

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