France’s Hollande Slaps Rich With 75% Tax Rate

Brilliant.  What makes you think they will stay?

Socialism invariably turns into Communism.

--Bastiat

French President Francois Hollande’s first annual budget raised taxes on the rich and big companies and included a minimum of spending cuts to reduce the deficit. 

The 2013 blueprint relies on 20 billion euros ($26 billion) in tax increases, including a levy of 75 percent on incomes over 1 million euros, and eliminating limits on the wealth tax. Hollande aims to reduce spending by 10 billion euros, bringing the deficit to 3 percent of output from 4.5 percent in 2012. The budget predicts growth of 0.8 percent.

“It’s true we’re asking for an effort of the richest, the top 10 percent and the top 1 percent in particular,” Prime Minister Jean-Marc Ayrault said. “Big companies of the CAC 40 pay less than the small companies and sometimes don’t pay at all. So we’re asking them for an effort too.”

France has a financing requirement of 171.1 billion euros in 2013, down from 182.8 billion euros in 2012, Agence France Tresor said in a simultaneous release. The debt agency said bond issuance alone would total 170 billion euros next year, down from 178 billion euros this year.

The announcement triggered a gain in French 10-year bonds, with the yield falling three basis points to 2.18 percent. French borrowing costs have tumbled since Hollande took office in May. Still, with growth stalled and unemployment at a 13-year high, bond-market quiescence is partly hiding the scale of the challenge facing Europe’s second-largest economy, investors and economists say.
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