French High Court calls 75% tax rate unconstitutional

Barack Obama should love this ruling. The reason the judges are overturning the law is because it doesn't treat all taxpayers equally.

That means it's "unfair":

The French constitutional council has rejected a government proposal to levy a 75% tax on high earners.

The tax on incomes over €1m has divided opinion in France and encouraged some to set up homes outside France.

The actor Gérard Depardieu bought a house in Belgium, prompting the French prime minister, Jean Marc Ayrault, to say: "It's pathetic really. Paying taxes is an act of patriotism and we're asking the rich to make a special effort here for the country."

In response Depardieu offered to give up his passport.

The government will redraft the tax proposal and resubmit it, Ayrault's office said on Saturday. The council's ruling would not obstruct the government's determination to reduce the public deficit, it added.

The high tax rate was the centre piece of President François Hollande's election campaign earlier this year but it has infuriated France's high earners, many of who have already moved to cities such as London.

The constitutional council is a politically independent body that rules on whether laws, elections and referendums are constitutional. It is made up of nine judges and three former presidents, and is concerned the tax would hit a married couple where one partner earned above €1m but it would not affect a couple where each earned just under €1m.

Ayrault's comments to Depardieu prompted him to write an open letter to the prime minister: "I am leaving because you consider success, creativity and talent grounds for sanction," he wrote.

Depardieu said he had paid more than €170m in taxes over the last four decades. He said he no longer recognised his country and offered to surrender his passport if he was, indeed, so pathetic.

The court also lowered other soak the rich taxes:

The constitutional court lowered a series of other tax increases, calling them excessive or saying they also violated equality of treatment for taxpayers. The tax rate on stock options and free shares was lowered to a maximum of 64.5 percent from a rate of as much as 77 percent. The marginal tax rate on a type of private retirement benefit, known as "retraites chapeau," was cut to a maximum of 68.34 percent from a planned rate in 2013 of 75.34 percent.

It appears that the Hollande government will be able to finesse the issue by tweaking the language a bit. Too bad. Successful people like Gerard Depardieu shouldn't have to choose between staying in the country of their birth or making a logical choice to preserve their property.