Fight for High Taxes Becomes Albatross for French Government

Like a force field against investment

AT FIRST it was merely a bad idea. A year ago, when François Hollande promised to tax incomes over €1m ($1.3m) at 75%, even his campaign team was surprised. "Cuba without the sun!" declared a startled Emmanuel Macron, now Mr Hollande's economic adviser in the Elysée. Nowhere else in Europe comes close to such a rate, with even Sweden going up only to 57% (see chart). But politically it did the trick: Mr Hollande declared war on the rich, kept a communist rival at bay—and went on to win the presidency.

Yet the 75% tax has since mutated into self-torture for Mr Hollande. Although it was never likely to affect many, nor raise much revenue, nor even penalise the rich as much as other taxes, it had huge symbolism. Abroad, it labelled the Socialist government as anti-business. At home, it prompted talk of fiscal exile, and even some departures, including of the actor Gérard Depardieu. Then in December France's constitutional council ruled the 75% rate unconstitutional; and in March the highest legal authority said that no individual tax should exceed 66.6%.