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

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-income
This paper was taxation.
prepared for
Keywords: France, François Hollande, income tax, public deficit,
competitiveness, business, French 2013 budget.
A paper by Ben Leblique
Ben.leblique@gmail.com
http://www.linkedin.com/in/benleblique
http://www.scoop.it/t/france-s-75-income-tax