French business exec promises to take a pay cut to avoid Hollande’s “supertax”
posted at 8:51 pm on April 10, 2013 by Erika Johnsen
This was my first thought when I read about Socialist French President Hollande’s revised approach for taxing the heck out of the wealthy. The top French court recently rejected his attempted follow-through on his campaign promise to tax individuals making more than a million euros a year at the punishing rate of 75 percent — but his wildly struggling popularity levels really couldn’t afford another broken promise, so he came back with a new proposal to instead force companies to pay a 75 percent levy on salaries over a million euros, for the next two years only.
But… can’t the companies temporarily reduce large salaries for those two years, then, and just deal with it rather than pay out the nose?
The head of France Télécom has pledged to take a pay cut if the country’s Socialist government introduces its 75% “supertax” band on high salaries.
Stéphane Richard said he would reduce his annual salary to below €1m (£855,000), the level at which the proposed tax would be applied, to save the company from having to pay it.
The tax, one of President François Hollande’s key election pledges, is aimed at soothing public anger at perceived fat cat salaries at a time of high unemployment and economic belt-tightening among the general population. …
Richard told the centre-right newspaper Le Figaro: “If the law is adopted … I will make sure my pay is reduced below the €1m mark. I wouldn’t want France Télécom to have to pay this tax on my salary.”
Whether or not other companies choose to follow suit, neither Hollande’s original nor revised proposal was ever really meant to be a substantive deficit-reduction tool as much as it was a symbolic socialistic gesture to make the wealthy pay for their outrageous, greedy audacity. …And now it just looks like a really impotent one. Why wouldn’t you just cut back on your high-earners’ salaries for the time being (and perhaps offer a wink-nudge agreement that future salaries will make up for it)?
And while France’s richest man has maintained that he was never applying for Belgian citizenship because of tax reasons, one does have to wonder at the timing here…
Mr Arnault, the head of luxury group LVMH, applied for the citizenship last year as Paris moved to impose a 75-percent tax on incomes above one million euros. He had always denied doing it for tax reasons.
“I explained several times that I would remain a resident in France and that I would continue to pay my taxes there. In vain – the message did not get through,” he told Le Monde newspaper.
“Today, I have decided to clear any ambiguity. I am withdrawing my demand for Belgian citizenship.”