France passes 75% 'millionaire's tax'

France's Constitutional Council has given the green light to a 'millionaire's tax', to be levied on companies that pay salaries of more than one million euros, or about $1.4 million, a year.
Activists of "Sauvons les Riches", (Save The Richs) carrying posters reading 'Tax Revolution.' The new tax on the rich will be a 50 per cent levy on the portion of wages exceeding 1 million euros paid in 2013 and 2014. Including social contributions, its rate will effectively remain roughly 75 per cent. (Francois Mori/The Associated Press)

France's Constitutional Council gave the green light on Sunday to a 'millionaire's tax', to be levied on companies that pay salaries of more than one million euros, or about $1.4 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 per cent tax to be paid by high earners on the part of their incomes exceeding one million euros, but the council rejected this, saying 66 per cent was the legal maximum for individuals.

French President Francois Hollande had to re-work his original tax plan. (Christophe Ena/The Associated Press)

The Socialist 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 per cent levy on the portion of wages exceeding 1 million euros paid in 2013 and 2014.

Including social contributions, its rate will effectively remain roughly 75 per cent. The tax will, however, 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.

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