French ‘Millionaire Tax’ Is On

France’s Constitutional Council gave the go-ahead on Sunday to the government’s so-called millionaire tax, to be levied on companies that pay salaries of more than 1 million euros a year, reports NYT.

NYT continues:

It was originally intended as a 75 percent tax to be paid by high earners on the portion of annual income exceeding €1 million, or roughly $1.37 million, but the council rejected it last year, saying it was unfair. France’s top administrative court later said that 66 percent was the legal maximum for individuals.

The Socialist government has since reworked the tax to levy it on companies instead, raising the ire of entrepreneurs.

Under its new design, which the council found constitutional, the tax will be a 50 percent rate on the portion of wages above €1 million in 2013 and 2014.

Including social contributions, the rate will effectively remain about 75 percent, though the tax will be capped at 5 percent of a company’s turnover.

The tax is expected to affect about 470 companies and a dozen soccer teams.

Ultimately, all taxes end up being charged against the factors of production, including labor. Companies may technically pay the tax but they will, in general, simply bid less for services, thus costing the high earners.

The Constitutional Council, a court comprising judges and former French presidents, can annul laws if they are deemed to violate the constitution.