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France's top income 75% tax


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the implications of a 75% top-income tax rate on business and public deficit reduction.

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France's top income 75% tax

  1. 1. 2012 France’s 2013 Budget: The implications of a 75% top-income tax rate of business and deficit reduction On Friday the 28th of September 2012, French president Francois Hollande unveiled what is said to be France’s “harshest budget in 30 years.” The most striking of measures included in the 2013 budget is a 75% income tax on the country’s highest earners, a policy that the newly elected president had promised to implement during his campaign. He and his prime minister, Jean-Marc Ayrault stress that such a tax is necessary in order to tackle France’s increasing public deficit, specifically getting it down to its target of 3% of GDP. Yet though the new tax may well produce some much needed extra government revenue, it will also persuade high-earning French business leaders to leave the country, thus having a negative effect on business and competitiveness in France. This paper will examine the ability of top-income tax rates to help reduce deficits whilst maintaining the presence of influential business leaders. It will argue that for France’s deficit reduction target to be met, a strategy that involves reduced public spending and greater structural reform should be implemented as opposed to dissuasively high top-incomeThis paper was taxation.prepared for Keywords: France, François Hollande, income tax, public deficit, competitiveness, business, French 2013 budget. A paper by Ben Leblique