The Constitutional Court has ruled that the 75% top marginal income tax rate, sprung by Hollande as a surprise on his own campaign earlier this year, is unconstitutional because it affects different households unequally depending on how total household income is distributed between spouses.
So how does one assess the fate of Hollande's most distinctive campaign ploy? It may well have helped to elect him by portraying him as a candidate farther to the left and more intransigently opposed to malefactors of great wealth than he actually is: "Riches, je vous haïs," he came across as saying, in a paraphrase of André Gide, but in fact the measure never made much economic sense and could be defended largely on the grounds that it would affect so few people and raise so little revenue as to be pragmatically insignificant. But as Hollande's post-election approval rating sank, the top marginal tax rate became a symbol not of Hollande's left-wing bona fides but rather of the inchorenece of his economic strategy. The Conseil Constituionnel was no doubt eager to strike it down at the first opportunity.And the government will no doubt seize on the opportunity to throw down some new symbolic markers demonstrating its determination. But what is really needed is a comprehensive overhaul of the tax system, which it is now too late to attempt, Hollande having expended his meager political capital already. So he must muddle through with the tax policy he has and hope that things improve without significant government input, for which the wherewithal is lacking.