Francois Hollande, the newly elected socialist president of France, looks set to achieve one of his main campaign goals and will impose a 75 percent tax rate on people earning more than $1.23 million per year, reports the Washington Post.
It's thought that the tax, which is a marked increase from the previous rate of 48 percent, will be implemented by next year, according to AFP.
Ministers have said that the tax will be temporary, and is part of a plan to balance France's books by 2017. Taxes already introduced are thought to be bringing in $8.7 billion this year.
Élie Choen, a past economic advisor for Sarkozy and Hollande, explained that the motivation was more political than financial, when talking with the Washington Post.
"From a strictly economic point of view, I wouldn’t recommend these policies," he said. "But that’s not what this is. This is clearly designed to create some kind of consensus in this country for structural reforms.”
By increasingly taxing the wealthy, Hollande hopes to garner increased support for increased austerity measures. Government spending cuts have begun in efforts to meet a plan to balance the budget by 2017 and are sure to continue. In effect, this move will serve as political points and an "I told you so" moment for Hollande's future socialism inspired policies.
As many wealthy French citizens bemoan the hike, wealthy Americans are doing the same to a proposed Obama tax hike from 35 percent to 40 percent currently being deliberated in Congress. Even ardent Obama supporters who understand and are willing to front the bill for the tax hike, including Hollywood actor Will Smith, are amazed and aghast at the French plan.
As Will Smith put it, "75!...God bless America."
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