http://money.cnn.com/2013/03/29/news/economy/france-tax-hollande/index.html?iid=A_E_News
France's Socialist President Francois Hollande has proposed a 75% top tax rate on businesses that pay salaries above 1 million euros. This is a change from his original proposal, which would have taxed high earners 75%. One economist, Jack Kennedy, projects that France's 1st quarter will be its worst since 2009, and this tax will likely reduce income even more. Because of the tax multiplier, even a small increase in taxes can lead to a huge drop in income across the country. It should be interesting to see how the public reacts to this, as his approval rating has already started to drop.
I would think a national sales tax would have the effect of reducing consumption. This would be bad for business, reducing GNP and throwing more people into unemployment. In addition, if we put an additional tax on things like medicine, I would think that might contribute to people becoming less healthy and ultimately needing more expensive medical intervention.
ReplyDeleteAlthough that may have those negative affects, increased savings could also increase investment, creating a positive output for France's economy.
ReplyDeleteHow does this tax rate compare to similar businesses in the US?
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