France To Raise Top Tax Rate To Shocking 75%

By SAMUEL BLACKSTONE | BUSINESS INSIDER | AUGUST 8, 2012

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 adviser 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 foot 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.”

France Begins Taxing Financial Transactions

By LUIS MIRANDA | THE REAL AGENDA | AUGUST 2, 2012

France has implemented –beginning today — a new financial transactions tax, a levy of 0.2% to be paid by investors whose shares belong to businesses with headquarters in the country.

Transactions in shares of companies whose market value is below EUR 1,000 million (1,230 million) will be exempt.
The application of a tax on financial transactions in Europe has not been possible so far due to the refusal of countries like the United Kingdom. At least nine nations that defend their implementation want to be forerunners in the application of taxes on financial transactions under the “enhanced cooperation” program.

The government of President François Hollande also decided to implement a new tax of 0.01 percent to certain high frequency business transactions, as well as some business with unpaid insurance (CDS) on government borrowings from the European Union (EU).

Unlike what happens in transactions with shares, this tax affects only companies and individuals subject to tax in France. For now, the government will not tax purchases of shares from companies and regular government bonds.

The application of the tax on financial transactions had been adopted under the former conservative government of President Nicolas Sarkozy. His Socialist successor wanted to make it applicable as soon as soon as possible and extend its reach to all financial transactions.

Anti-Austerity Protests Grow in Europe

By PATRICK DONAHUE | BLOOMBERG | APRIL 30, 2012

A recession in Spain and forecasts of rising unemployment in the 17-nation euro area are amplifying criticism of the German-led austerity agenda in election campaigns this week in France and Greece.

With Spain’s largest unions leading marches involving thousands of protesters in 55 cities yesterday, Prime Minister Mariano Rajoy’s government battled to prevent Spain from becoming the next country to seek a bailout. In France, where the presidential-election runoff is set for May 6, Socialist frontrunner Francois Hollande pushed back against German Chancellor Angela Merkel’s focus on deficit reduction.

“Watching Spain now is exactly like watching Ireland around October 2010 before Ireland was forced into its bailout,” Megan Greene, a senior economist at Roubini Global Economics LLC, told Bloomberg Television’s “Street Smart” on April 27. “The government can’t win no matter what it does.”

Spain’s economy shrank in the first quarter as the nation officially entered its second recession since 2009. Gross domestic product contracted 0.3 percent. Joblessness in the euro area probably to rose to 10.9 percent last month, the highest since 1997, according to economists surveyed by Bloomberg.

As Spanish joblessness reached almost one in four of the working-age population, Hollande demanded that euro-area leaders move to promoting growth from cutting budgets, as agreed by 25 European governments in the so-called fiscal pact. Merkel drew the line at re-opening talks on the fiscal treaty, though she said growth could be boosted with labor-market reform and European Union funding.

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