Millionaires’ tax: Hollande hits France’s rich with 75 percent tax rate
French President François Hollande addresses the UN General Assembly meeting on September 25, 2012 in New York City.
Francois Hollande, France's newly elected Socialist president, has put forth an aggressive 2013 budget that taxes the wealthy and keeps government spending largely intact.
The budget plan will tax the country's millionaires at 75 percent and those earning over $150,000 at 45 percent, in an attempt to bring in $39 billion and slash the deficit to 3.5 percent of GDP, down from 4 percent this year.
"This is a fighting budget to get the country back on the rails," Prime Minister Jean-Marc Ayrault said, adding that the 0.8 percent growth target was "realistic and ambitious," Reuters reported.
"It is a budget which aims to bring back confidence and to break this spiral of debt that gets bigger and bigger," Ayrault added, according to Reuters.
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France's richest citizens were taxed at 48 percent under Sarkozy, whose "austerity-first" strategy left many French voters disappointed and frustrated with his leadership. The raised taxes will affect around 30,000 French citizens, or 0.46 percent of the population, the International Business Times reported.
Some analysts are skeptical of the budget, saying the higher taxes and lack of spending cuts could make growth more difficult.
"I have a hard time seeing … how we're going to find the necessary growth in 2013 and afterwards," Philippe Waechter, economist at Natixis Asset Management, told BBC News. "So far we have a lot of numbers and not the story."
"So far, its predictions look naively rosy," wrote Nina dos Santos, the anchor of World Business Today.
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Hollande's popularity has also taken a dive — according to a recent poll, his rating has fallen from 54 percent to 43 percent since last month — as France's record-high unemployment refuses to improve and the economy's recovery continues to stagnate, the IBT reported.
"President Hollande staked his political reputation by announcing that the government will halt the unemployment trend by the end of 2013," wrote Societe Generale economist Michel Martinez. "Low GDP growth is going to limit job creation and we think that unemployment will carry on increasing until the end of 2014."
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