International

France's top court approves 75 percent 'millionaire tax' on employers

Companies will be taxed for employees who make more than 1 million euros a year

President Francois Hollande's wants the 'millionaire tax' to help get France out of its financial crisis.
Christian Hartmann/Reuters

France's Constitutional Council – the country's highest court – gave the green light on Sunday to a controversial "millionaire's tax," to be levied on companies that pay salaries of more than 1 million euros ($1.38 million) a year.

The measure, introduced in line with a pledge by President Francois Hollande to make the rich do more to pull France out of crisis, has infuriated business leaders and soccer clubs, which at one point threatened to go on strike

It was originally designed as a 75 percent tax to be paid by high earners on the part of their incomes exceeding 1 million euros. But the council rejected this, saying 66 percent was the legal maximum for individuals.

The government has since reworked the tax to levy it on companies instead, raising the ire of entrepreneurs.

Under its new design, which the Council found constitutional, the tax will be an exceptional 50 percent levy on the portion of wages exceeding 1 million euros paid in 2013 and 2014.

Its rate will effectively remain roughly 75 percent, but the tax will be capped at 5 percent of the company's turnover.

The Council, a court made up of judges and former French presidents, has the power to annul laws if they are deemed to violate the constitution.

Reuters

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