Hollande’s 75% tax in trouble

It looks like France’s Constitutional Council has found fault with François Hollande’s proposal to tax incomes over one million Euro at 75 percent. If google translate is to be believed, the problem is in the application of the tax, not the proposal itself.

With this tax, a household, each member would receive an income of 900,000 euros, would be exempt, while another, only one member would earn € 1.2 million and the other not, should the discharge , which would clearly a “breach of equality under the ability to pay”, it was explained, as an example, to the Council.

So if the French tax system taxes household income and not individual income then the tax would have an adverse impact on some households with a lower joint income but one spouse being above the tax threshold than others with a higher joint income but with each spouse being below the tax threshold.

This is a technical problem and not a rejection of the tax in principle. On the other hand, few constitutions prevent tax exploitation – the view being that those sorts of thing are best left to the democratic mechanism.

Update: The BBC are reporting that the tax design is a problem.

In its ruling on Saturday, the Constitutional Council said the new tax rate “failed to recognise equality before public burdens” because unlike other forms of income tax, it was to be applied to individuals rather than households.

The council also rejected new methods for calculating the tax.