France overturns 75 per cent tax on ultrarich
France's President Francois Hollande gives a speech during a ceremony to honor French troops home from Afghanistan, at the Elysee Palace, in Paris, Friday, Dec. 21, 2012. (AP / Thibault Camus)
The Associated Press
Published Saturday, December 29, 2012 7:25AM EST
Last Updated Saturday, December 29, 2012 1:18PM EST
PARIS -- Embattled French President Francois Hollande suffered a fresh setback Saturday when France's highest court threw out a plan to tax the ultrawealthy at a 75 per cent rate, saying it was unfair.
In a stinging rebuke to one of Socialist Hollande's flagship campaign promises, the constitutional council ruled Saturday that the way the highly contentious tax was designed was unconstitutional. It was intended to hit incomes over (euro)1 million ($1.32 million).
The largely symbolic measure would have only hit a tiny number of taxpayers and brought in an estimated (euro)100 million to (euro)300 million - an insignificant amount in the context of France's roughtly (euro)85 billion deficit.
Prime Minister Jean-Marc Ayrault was quick to respond, saying in a statement following the decision the government would resubmit the measure to take the court's concerns into account. The court's ruling took issue not with the size of the tax, but with the way it discriminated between households depending on how incomes were distributed among its members. A household with two earners each making under (euro)1 million would be exempt from the tax, while one with one earner making (euro)1.2 million would have to pay.
The French government approved the tax in its most recent budget, amid criticism by some that it would do little to stem the country's mounting fiscal problems and would drive away the wealthiest citizens. Hollande's popularity, meanwhile, has been tanking as the country's unemployment continued its rise for the 19th straight month.
In recent weeks, Gerard Depardieu -- France's most famous actor -- announced his intention to turn in his French passport and move to a village in a tax-friendly Belgium.