Following a French court ruling that former president Francois Hollande’s dividend tax is unconstitutional, France is scrambling to come up with an extra €10 billion to stay within Eurozone deficit limits.
Part of the solution is to hike the corporate tax rate. Other measures still have to be found. The proposal by Economy Minister Bruno Le Maire is to hike corporate taxes on the top 300 French companies to a whopping 45%.
That’s the second largest in the industrial world after the United Arab Emirates at 55%.
Via translation from Le Monde.
The 300 largest French companies will have to pay an “exceptional surcharge” intended to refund part of the tax on the dividends established under the quinquennium of François Hollande, but invalidated by the Constitutional Council. The measure will concern companies with “more than one billion euros in turnover”, according to the Economy Minister, Bruno Le Maire.
The corporate tax rate for companies with turnover of € 1 billion to € 3 billion is expected to increase this year from 33% to 38%. It will rise to 45% for companies whose annual performance exceeds 3 billion euros.
“I realize that I ask them for a considerable effort, but I appeal to their civic sense. These are companies that are doing well, that have good results,” defended Le Maire.
The Minister of the Economy had already said in recent days that his priority was to live up to his promise to reduce the government deficit to less than 3% of gross domestic product (GDP) this year, and that he was therefore planning to put large groups to contribute to repay the 10 billion euros due to the companies that paid this 3% tax on dividends, introduced in 2012.
Better Idea
Instead of hiking corporate taxes to 45% (which will only bring in half the amount needed) how about cutting spending?
How about letting businesses operate seven days a week?
How about cutting all sorts or red tape?
I have a confident prediction: This tax hike, and whatever idiocy France imposes to collect the other half of the now illegal dividend tax, will not bring in close to the amount projected.
Mike “Mish” Shedlock
Tax fast food,sugar, high fructose products, processed meats, and you kill two birds with one stone. General health of the individual improves , less drag on healthcare, and cash flow for taxes increases. Then cut public service pensions.
Where the productive man dreams of the things he might create if only left alone by his fellows, the Progressive dreams of the world he could create if only the lives and property of his fellows were at his disposal.
This evil stems from the desire for power to rule over other men.
–> “And no thought was given to reducing spending? Maybe cutting salaries of government employees?”
@Six000mileyear … +1000000000000
As I have said many times, tax policy is simple: you tax what you want less of. If you want less corporations (and jobs), you tax corporations heavily. Then the corporations move to other countries, and the problem is solved.
And no thought was given to reducing spending? Maybe cutting salaries of government employees?
Washington is currently putting together a tax bill promising both reform and tax cuts which means our deficit spending is again being ignored. It is as if the whole world has capitulated to the idea that we can spend our way out of the debt and that levels of unsustainable spending are not a problem.
Spending does matter! The article below delves into why austerity has been given a bum rap and why we would be far better off if the term austerity was replaced or renamed sustainable spending.
http://brucewilds.blogspot.com/2017/11/austerity-should-be-renamed-sustainable_1.html
For those of us who work for businesses open 7days a week, working 5days plus on call hours, it is nothing but a prison. Hard to explain to those who have never done this….blogging I’m afraid doesn’t count. Spending an extra day each week with family far outweighs and monetary incentive.
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Turnover is total revenue…sales plus any other revenues.
Corporations can easily vote with their feet pretty quickly. The US was able to tax corporations at over 50% after WWII, but we were pretty much the only country not destroyed by the war. 70 years later we have to compete.
Turnover? Is that “profit” or “gross income”?