75% tax rate is cut to 66.6%

A PROPOSED new tax on incomes over a million euros a year should be slashed from 75% to a maximum of 66.6%, the Conseil Constitutionnel has ruled saying, the original plan was confiscation, not taxation.

The top rate wealth tax was a key part of President Hollande’s election campaign promises and has been trimmed by the council, which has the right to check laws to see if they abide by constitutional rules.

It also demanded other tweaks, notably for the tax to apply to households (as for other income tax) not individuals, and for it to apply to all income types, not just work income, as was proposed.

The tax was meant to be levied on the part of the work income of an individual that exceeded €1 million, and was to come on top of the usual income tax which rises (as of this year) to a 45% band above €150,000.

This initial proposal was, notably, censored by the conseil last year due to the fact it was on individuals, which could have created unfairness: for example a family with one person earning €1.1 million would have paid it but one with two members earning €900,000 each, would not.

However the conseil also warned that the previous plan could have been seen as too “confiscatory”.

The Conseil Constitutionnel is expected to present its formal recommendations for a replacement tax to the government today.

Staff of new Budget Minister Bernard Cazeneuve have already said that some of the proposals will cause “heavy technical constraints” in terms of working out the way the new tax will work.

Photo:© DiMmEr - Fotolia.com