French Socialists cancelled the 75%-tax bullshit

The ruling French socialists, under the leadership of President Francois Hollande has found an elegant way to cancel one of their most stupid, and at the same time - most popular policies - the 75% income tax on the "rich". Yesterday the French Constitutional Council ruled the new taxes unconstitutional shooting directly in Hollande's most attractive promise on elections held this year. This way Hollande has fulfilled his promises, but nothing of them will happen actually. Obviously this is a political maneuver, as the arguments of the Council (called also Constitutional Court) are very away from juridical and sound more like political talking.

 The main argument the council used is the casus of "equality". But equality means a comparison of 2 or more different options with no one of them fixed in Constitution as the right one. So in fact using the equality as an argument the Council can censor any of them. But this is not jurisprudence. It is just politics.

 For instance the Council decided that imposing a personal income tax for people earning more than 1 million euros ($1,3 million) per year is unconstitutional because in France the income tax is calculated per household and not per person. So with the new tax some households may have to pay higher taxes than other with the same overall income. But nowhere in Constitution is written that the taxes must be household-based. So with the same logic, The Council could censor the entire part of the tax code imposing the household tax, and leave active the part of the code that imposes the personal tax. There is no clear juridical arguments in favor of one of the options.

 Generally the Council decision may mean that if in the future the lawmakers decide to alter the philosophy of taxing, and as in other countries, they migrate from household to personal taxing, then they may face a Constitutional ban. I.e. household taxing becomes constitutionally granted, without any text about this in the Constitution... :)))

 Some other arguments also sound funny from juridical point of view. For instance the Council uses arguments like "ability to pay" and "excessive burden" to declare some articles of the Finance Act unconstitutional. But nowhere in Constitution is said what burden is "excessive" and what level of taxes is possible to be paid. These are political and economic science questions, and not legal questions. In fact even the old French taxes are one of the highest in the world and could be considered "too high" or as "excessive burden". So with the same logic these taxes can be abrogated too...

 Analyzing all this, it becomes clear that The Socialists simply used the Constitutional Council to do the "dirty" work and excuse them before potentially angry voters from the extreme left. The Government, consisting of elite educated officers perfectly understands that a 75% tax is a bullshit. It knows that the only thing it can bring is chasing out the talented and entrepreneurial people, that will damage the economy and lead to worse consequences even for the poor people. Weaker economy means less money for the poor too. But at the same time this Government is in power due to the super populist promise of taxing "the rich". The election margin between Hollande and Sarkozy was very narrow and it is not sure if Hollande could become a President without the "taxing rich" illusion (de facto a lie). So after some famous Frenchmen started to emigrate to Belgium and a national debate started in media, after France become a laughing stock in Europe, and even after Vladimir Putin invited Gerard Depardieu to become a Russian citizen, after all this The Government simply had no choice than to step back. But as this would be a drastic break of a political promise, so they just informally "asked" the Constitution Council to stop the crazy tax.

 In fact, it the Government really wants this tax, it can re-pass it with little corrections so it is formally no more unconstitutional. For instance instead of taxing 75% on personal income over 1 million, they can impose the tax on the household income. In all cases people earning yearly 500 000 euros each or 1 million both are not poor people. The Government can also analyze the profile of these rich families and calculate the same overall income, based on household taxing. I.e. adding to the 1 million border the average income of the spouses of these millionaires. So the taxing border can become 1,2 or 1,5 million per household. And then there will be no inequality even according to the creative interpretation of the Constitutional Council.

 But, believe me, all this will not happen. The Government simply does not want this absurd tax. Now it has an ideal excuse for its lack.

 Finally we can conclude that French Socialists has made a successful political maneuver. They took the power removing Sarkozy from it, and now they will rule not much different from Sarkozy. In fact France needs mostly right and conservative reforms, including serious tax reductions. It does not need additional leftish and socialist measures. Its economy even now is collapsing under an excessive social burden. And much austerity is ahead...

Dec 30th 2012

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