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France Approves 75% Income Tax for Salaries More Than 1 Million Euros
France’s constitutional council gives the final nod to a controversial tax measure, which they rejected last year. The French President Francois Hollande received approval for the new “millionaire tax” and a go ahead for his plan to tax salaries above 1 million Euros at 75 percent for this year and next.
After taking social contributions into account, the effective taxation for portions of salaries exceeding a million Euros will be about 75 percent. However, the taxation would be capped at 5 percent of a company’s annual turnover.
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The tax, which will be levied on 2013 and 2014 incomes of those who receive more than a million in salaries, is expected to affect about 470 companies and about a dozen soccer clubs. The French government expects to raise about 210 million Euros with the new taxation.
Earlier, France’s constitutional council had rejected the measure arguing that it was unfair and violated the constitution of the country. At the time, the constitutional council held that 66 percent was the legal maximum taxation applicable to individuals.
Following the earlier rejection of the tax measure, the government reworked on it to be applicable to companies and not individuals. This has caused resentment among entrepreneurs.
In a protest against the tax, French football clubs had gone on strike earlier this year, because a large number of players earn above the threshold of the new tax. Clubs hold that the tax could lead to an exodus of top players from the country.
French actor Gerard Depardieu has already left the country in protest against the new tax regime. However, the measure is popular with French citizens as shown by recent polls, and because the tax would help to reduce the huge deficit in public budgets.
Image Credit: Wikimedia
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