Au Revoir to the Millionaire’s Tax
December 29, 2014
The French government will quietly allow its millionaire's tax to expire. While the millionaire's tax was relatively insignificant from an actual budgeting standpoint, the 75% rate on earnings over a million Euros attracted a lot of attention worldwide, simply for the eye-popping rate. This tax also resulted in actor Gerard Depardieu leaving the country in a dramatic one-man protest.
The millionaire's tax was part of a larger tax increase package that did not raise nearly as much revenue as designed. The experience in France shows, among other things, that "static" scoring of tax bills – that is, revenue estimates that do not include assumptions about behavioral responses to tax changes – can be far too optimistic.
It also shows that there is simply not very much appetite for high rates. If socialist governments in Europe don't believe in 75% tax rates anymore, then does anyone?
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