Tax the rich at 75%? At least!

Submitted by Matthew on 7 March, 2012 - 10:35

François Hollande, candidate of the Socialist Party in the French presidential election coming up on 22 April and 6 May, has called for 75% tax on incomes above a million euros.

Supporters of incumbent president Nicolas Sarkozy have expressed outrage and muttered about “confiscation”, but polls show 61% of voters backing the policy and only 29% against.

At present the highest marginal income-tax rate in France is 41% (on pay above 70,830 euros: similar to the 40% highest rate in Britain, on pay above £34,371, before the 50% band for pay above £150,000 was introduced in April 2010). In fact, after they have manipulated their allowances and loopholes, the top 1% in France pay 18.3% of their total incomes in tax and the top 0.1% pay 17%.

Meanwhile in Britain, 500 bosses have signed a letter of protest demanding that the Government remove the 50% tax-band and tighten the screws on the worse-off instead. The Government, worried about public opinion, seems likely to keep the 50% band for now.

Hollande is no left-winger, and his Socialist Party has loosened its never-strong links with the working class probably more even than the Labour Party in Britain. The Socialist Party held either the presidency or the prime ministership or both from 1981 right through to 2002, and from 1983 onwards pursued consistently neo-liberal policies.

But Hollande feels under pressure.

In late 2010 there was a huge strike movement in France against moves to worsen pension provision — far more militant than the sedate action we have had in Britain so far over the same issue — and, though the movement did not win, it left a sediment in public opinion.

Hollande has also had to promise to renegotiate the EU's new budget-balancing treaty.

The 75% tax proposal is, as Hollande himself says, symbolic. But it is an important symbol in a political world where, since the early 1980s, the idea that the rich should be taxed less has been as axiomatic in the mainstream as that water is wet.

In France itself, the top tax-band was 90% in the years after 1945, and still above 60% at the start of the 80s.

In Britain, the top tax-band, in 1979, was 98% on investment income and 83% on other income: it had been high since 1945, and all through 13 years of Tory rule in 1951-64.

Today, the highest income-tax band for the rich is 59%, in Denmark. Taxes on wealth used to be widely discussed. Today, France is the only EU country with a wealth tax, and it is at a very low rate. Austria, Denmark, Germany, the Netherlands, Finland, Sweden, Spain, and Greece used to have small wealth taxes and have abolished them. Britain has never had one.

After-tax economic equality has increased hugely in the three decades of tax cuts for the well-off, partly because of the tax cuts, and partly because pre-tax loot for the rich has increased too.

Despite the claim that “incentives” for the ultra-rich are vital for economic growth, that growth has been slower in the neo-liberal decades than it was in the decades of relatively high top tax rates.

Total household income in Britain is not much short of £1 trillion a year. The top ten per cent get 31% of that, or about £300 billion a year. Take even ten per cent of those billions in tax, and it's more than enough to offset all the cuts currently being pushed through by the coalition Government.

Socialists aim to establish democratic and social control over all social wealth, rather than leaving it in the hands of a minority of individuals and taxing them.

But to tax seriously would be a first move towards control. Tax the rich!