Although polls suggest a large majority of people in France support the 75% top tax rate, if is seen as detrimental to Frances economy and employment as many high wealth individuals and companies consider relocating to countries to with more favourable and less punitive tax rates, with France now being considered as ‘anti-business’ and a country who wishes to penalise those that work hard and create welath and jobs by being successful.
The detrimental effect of the businesses and large companies relocating being, less spending by high earners, meaning they spend elsewhere rather than in France, employment reduced as large employers move out, and less investment by companies in France.
Whereas a 75% tax headline rate may seen attractive to many who are struggling on a fraction of that pay scale, it is though the increase in revenues will fall way below tax receipts lost elsewhere in the economy, through lack of job creation, unemployment, and lack of both internal and inward investment.
Ratings agency Standard & Poor, has highlighted the risks to the French economy posed by weak economic growth, high unemployment, the rising national debt and ‘elevated’ levels of tax and spending.
With his disastrous handling of the economy, Mr Hollande is by far the most unpopular president in the recent history of France, according to all recent polls, as there are regular public demonstrations against him.
Unemployment in France is up by 5.6% compared to this time last year.
Whilst Mr Hollande has said he hoped his 75% tax rate will encourage companies to lower executive pay during tough economic times, it is seen by many as a short sighted and rather naive quick fix to France’s economic problems, which will actually result in worsening economic problems for all people in the France.