Human Events Blog

French court invalidates 75 percent tax rate as unfair

Socialist president Francois Hollande of France swept into office with a promise to soak the rich as they had never been soaked before, raising eyebrows around what remains of the free world by socking incomes above 1 million euros (about $1.3 million U.S. dollars) per year with a 75 percent tax rate.  There aren’t many people in France who earn that kind of money – about 1,500 families, according to the Wall Street Journal - and it seems as if just about all of them were thinking about fleeing the country to escape it, led by famed actor Gerard Depardieu.

But now comes word that France’s Constitutional Council, which reviews laws in much the same manner as the United States Supreme Court, has invalidated the confiscatory tax rate.  Their reasoning is provocative: they weren’t so much upset by the confiscatory nature of the tax as its “unfairness.”  In other words, the new tax doesn’t affect enough people, so it will most likely be rewritten to affect more.

Please don’t be childish about this, good people of France.  It was going to happen anyway.  Just look at the Alternative Minimum Tax in the United States, originally written to affect almost exactly the same number of people, back in 1969.  It was a soak-the-rich measure explicitly intended to capture revenue from bloated fat cats who “abused” perfectly legal deductions to minimize their tax exposure.  Today it hammers over 4 million Americans per year, and most of them make less than $200,000.  The dictionary definition of “gullible” is a voter, in any country, who thinks “millionaire taxes” will only apply to millionaires.

In fairness to France’s frustrated socialists, the reasoning followed by the Constitutional Council is a bit puzzling, because it sounds as if they’ve only just discovered the concept of “bracket creep,” which is a feature of all “progressive” tax schemes.  From a Reuters report:

The Council, made up of nine judges and three former presidents, is concerned the tax would hit a married couple where one partner earned above a million euros but it would not affect a couple where each earned just under a million euros.

UMP member Gilles Carrez, chairman of the National Assembly’s finance commission, told BFM television, however, that the Council’s so-called wise men also felt the 75 percent tax was excessive and too much based on ideology.

That’s always a problem with progressive tax rates.  In fact, here in America, President Barack Obama recently mocked House Speaker John Boehner’s “Plan B” proposal to raise taxes only on actual millionaires – as opposed to the people Obama commonly refers to as “millionaires and billionaires,” but are actually married couples and small businesses that earn $250,000 per year or more – by observing that people who made “only” $999,000 a year wouldn’t pay the higher tax rate.  That’s true of Obama’s income confiscation plans too – a couple that squeaks by with $249,000 a year wouldn’t pay his higher taxes.  But socialist power, like all forms of tyranny, is whimsical – it can make sport of bracket creep for millionaires, as thought it were the height of absurdity, while insisting that the exact same situation is perfectly logical and reasonable at $249,000.  The point at which things degenerate from a deadly serious quest for “social justice” and “income equality” into comical farce depends on the humor, and desperation, of the socialists.

The decision of the French Constitutional Council is likewise based on whimsy, rather than firm principle.  They seem to think this particular tax is just a bit too arbitrary and confiscatory.  The Hollande government is confident they can make a few tweaks and get it past the Council on the second try.  The attitude of these government ministers is instructive:

Finance Minister Pierre Moscovici said the rejection of the 75 percent tax and other minor measures could cut up to 500 million euros in forecast tax revenues but would not hurt efforts to slash the public deficit to below a European Union ceiling of 3 percent of economic output next year.

“The rejected measures represent 300 to 500 million euros. Our deficit-cutting path will not be affected,” Moscovici told BFM television. He too said the government would resubmit a proposal to raise taxes on high incomes in 2013 and 2014

(Emphasis mine.)  So if the money from this confiscatory tax rate isn’t essential to your deficit reduction plans, why impose such a draconian, economy-killing, society-roiling tax in the first place?  God save all the free people of the Earth from corrupt governments that impose purely symbolic taxes to “punish” hated class enemies, or impress selected lower-income voting blocs with the socialist credentials of left-wing political leaders.

We’re dealing with the same problem in Washington, D.C., as our so-called “fiscal cliff” drama degenerates into the American left frantically demanding higher taxes that would have a laughably tiny effect on the budget deficit, at best… but these class-war taxes are presented to the American people as if they were the very key to fiscal sanity, the most urgent business of our bankrupt central government.  It’s a sideshow, and it does not reflect well on the American people that it seems to be working.

Progressive taxation and large-scale peacetime deficit spending are the key ingredients in the recipe for socialist poison.  They give the architects of unsustainable Big Government a vital advantage: they can convince the populace that nobody really has to sacrifice anything to get the benefits promised by the Left.  The government either takes a few bucks from lazy rich people who will never miss it, or the funding is conjured from thin air.  And the government itself never has to prioritize its spending, choosing to make difficult cuts in some programs to finance new initiatives.  Indeed, the United States government no longer bothers to constrain itself with budgets.  That was functionally true long before Senate Democrats literally stopped passing budgets.  When the government spends 30 or 40 percent more than it actually has, year after year, with no serious thought of ever repaying the debt, it’s not living under a “budget.”

This approach allows governments to rack up titanic debts, with a corresponding increase in public dependency upon government welfare.  These debts are presented to the next generation, not as evidence of government irresponsibility, but rather as irresistible demands for higher taxes and diminished freedom.  Those who object find a sullen army of Big Government’s clients glaring resentfully at them.  The national conversation shifts to talk of confiscation and “austerity.”  Such a conversation sounds equally vicious and silly in French, English, or any other language.

 

 

 

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