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France's president, Francois Hollande, is imposing a stiff new tax on French salaries above 1 million euros, or about $1.36 million, a year. Combined with other taxes and charges, the effective tax rate will be 75 percent.
Mr. Hollande seeks to close France’s budget deficit and give government more resources to address the country’s 11 percent unemployment rate and feeble economic growth. He made the tax one of his principal issues in the 2012 presidential election, in which he defeated incumbent Nicolas Sarkozy.
The tax has unusual wrinkles. It will be paid by employers — the corporations, banks, and other institutions that provide the high salaries. It will be capped at 5 percent of an employer’s revenues. Soccer teams will be especially affected, given the astronomical salaries of players and coaches.
Critics say the tax will chase business executives, bankers, and other alleged job creators out of France. Mr. Hollande argues the government can make better use of the revenue by boosting the French economy.
Americans might consider France’s new tax in light of this country’s problems with poverty and income inequality. Unfortunately, tax reform of any sort has not made it onto the agenda of President Obama or Congress for 2014.