Tax the rich
Earlier 2012, socialist Francois Hollande ran his election bid mostly on the pledge to raise tax on the rich and to abandon austerity plan in France. He won the election as there were enough people believed that he could raise tax on the rich to spend on social programs for the “poor”.
Does this sound familiar?
Well, here is the rest of the story…
Shortly after taking office, Hollande came to know the reality of government. His 2013 budget includes over 37 billion in spending cuts—including 2.5 billion in health spending and 10 billion on various government programs. His budget also called for higher tax on business and the rich.
On 12/29/2012, his so-called 75% super-tax rate on individual making more than 1 million euro was ruled unconstitutional by the constitutional council—making up of 9 judges and 3 former presidents. Adieu, 75%! (at least for now)
This decision capped a “bad” week for Hollande. Earlier in the week, France saw its unemployment rate rising to a record 15-year high.
One wonders if Gerard Depardieu who moved to Belgium to avoid 75% tax rate will consider moving back to France now.
And one may wonder if wealthy Californians will move out of California to avoid paying Jerry Brown’s new tax hike on the rich. With Obama’s threat to raise the top marginal rate to 39.6% at the federal level, wealthy Californians may face a tax rate of over 50% after the addition of California top rate of 13.3%.
What should be the fair share for the rich to pay in tax?
And how one should measure the fair share—by the tax rate or by the amount?
It’s been proven in the past, when tax rates were high, the rich contributed less (as percentage) into the total tax collected by the government (click here for more). As a result, the middle class ended up paying more (as percentage) into the total tax revenue.