Yesterday Francois Hollande, the socialist president of France, announced a package of major tax raises targeted at high-income households and large corporations.
Facing a projected 40 billion euro budget gap over the next two years, Hollande’s socialist government hopes to gather 7.2 billion euros annually through the tax plan. Those targeted include banks, oil companies and households making over 1.3 million euros. The plan also includes higher taxes on shareholder dividends and financial transactions.
Hollande was sworn into office on May 15. In his campaign against incumbent Nicolas Sarkozy, Hollande ran on an ardent anti-finance, anti-austerity platform, pledging to raise the tax rate on those making over 1 million euros to 75 percent. France’s economic elite have appeared jittery since his election. Currently, Hollande’s administration plans to roll out the tax this coming fall. In June, Hollande’s government leveraged its holding in a handful of French corporations to force down CEO salaries in those companies.
Hollande’s anti-austerity stance frightened many economic commentators outside of France who worried about the Euro crisis and economic disintegration of southern Europe. For example, on April 28 the Economist wrote:
One thing seems certain: a French president so hostile to change would undermine Europe’s willingness to pursue the painful reforms it must eventually embrace for the euro to survive. That makes him a rather dangerous man.
Despite such ominous prophecies before his election, he’s proven quite adept on the international stage. Last week, he backed German Chancellor Angela Merkel down from her hard-line austerity stance towards Spain and Italy and helped orchestrate an agreement to use the European Union’s bailout fund to directly finance struggling banks.
In distinct contrast to the 75 percent tax promise that lay at the heart of Hollande’s presidential campaign, taxes and rhetoric surrounding personal wealth looks quite different in the upcoming U.S. elections. The Bush tax cuts are due to expire in the winter, and President Obama has been insistent so far that he will let them pass without renewing the cuts for the wealthiest income earners. However, other Democrats are worried about the tax increases, and Obama has kept relatively quiet on the issue. After the Supreme Court upheld the healthcare mandate as a tax last week, conservatives have been up in arms, construing it as raising taxes on Americans. Over the past year, Obama has placed tepid support behind the ‘Buffet Rule,’ which would tax 30 percent of income for Americans making more than 1 million dollars—a novel idea in the U.S., perhaps, but negligible in comparison to Hollande’s plan in France. Romney, for his part, has proposed a program of tax cuts that would save him personally close to 5 million dollars a year based on his 2012 tax returns.
While both candidates have articulated tax reform plans, discourse on taxes has mysteriously receded as the two parties move towards their respective conventions in late August and early September. With the economy such a looming issue, it seems a curious omission.
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Isaac Dalke is a summer 2012 In These Times editorial intern.
