March 12, 2014
France cleared by council to impose controversial 'millionaire tax'
France's Constitutional Council has given the green light for the government's controversial 'millionaire tax', to be levied on companies that pay salaries of more than 1 million euros ($1.38 million) a year.
The measure, introduced in line with a pledge by President Francois Hollande to make the rich do more to pull France out of crisis, has infuriated business leaders and soccer clubs, which at one point threatened to go on strike.
It was originally designed as a 75 percent tax to be paid by high earners on the portion of annual income exceeding 1 million euros, but the council rejected it last year, saying it was unfair. France's top administrative court later said that 66 percent was the legal maximum for individuals.
The Socialist government has since reworked the tax to levy it on companies instead, raising the ire of entrepreneurs.
Under its new design, which the council found constitutional, the tax will be a 50 percent levy on the portion of wages above 1 million euros in 2013 and 2014.
Including social contributions, the rate will effectively remain about 75 percent, though the tax will be capped at 5 percent of a company's turnover.
The tax is expected to affect about 470 companies and a dozen soccer clubs, and is forecast to raise approximately 210 million euros a year.
The Constitutional Council, a court comprising judges and former French presidents, has the power to annul laws if they are deemed to violate the constitution.