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            French Leader's Super-Tax Falls Flat, Angers Businesses

   by Reuters

   France's Socialist president may save face with some supporters by
   resurrecting a 75 percent super-tax on million euro salaries, but his
   plan to shift the levy from individuals to companies only alienated
   business leaders on Friday and impressed few even on the left.
   Francois Hollande announced a re-draft late on Thursday of his plan for
   a 75 percent tax on income over 1 million euros - an election pledge
   that was crushed by the Constitutional Council - so that it hits
   companies rather than individuals.
   The rehash means he can maintain an emblematic tax rate meant to
   symbolize making the rich help pull France out of crisis, rather than
   having to cap it at the 66 percent France's top court says would be the
   legal maximum for individuals. Yet it will reinforce a view that
   Hollande is anti-business, and could reap even less for the
   cash-strapped government than the initial version, which would have
   raised some 200 million euros or $260 million a year from around 1,500
   millionaires.
   "I don't understand the president's thinking," said Laurence Parisot,
   head of the Medef employers' group, calling the rejigged super-tax a
   "knock to the business sector."

   French economist Thomas Piketty, a taxation expert, called the proposed
   move "a patch-up job."
   "It's as useless as the original plan. It's symbolic and inefficient
   and it avoids the bigger issue which is the need for a broad fiscal
   reform,'' he told Reuters.
   Analysts struggled to guess how many high-earners could be hit, but
   many of those on million-euro packages receive much of it in benefits
   like stock options that would likely be exempt.
   BNP Paribas economist Dominique Barbet said the revived super tax would
   have a negligible effect on the battle to reduce the groaning public
   deficit. "It's marginal," he said.
   The tax was only ever meant to be in place for a couple of years, so
   companies may now dodge it by holding back bonuses for a few years or
   paying employees through offices outside France.
   "It's a symbolic tax he wanted to hold onto at all cost, but this is
   ridiculous and absurd. It's very disappointing," said Michel Rousseau,
   head of liberal think tank Fondation Concorde. "He will raise
   absolutely nothing, people will cheat like crazy. The French have a
   capacity to adapt to bad news."
   Scratched record
   Hollande, scrabbling to shore up state coffers and kick-start
   investment and spending as his growth, deficit and job creation goals
   fall apart, made the tax announcement in a primetime TV interview aimed
   at restoring public faith in him.
   Critics of his performance said his assertion that all the tools were
   in place for a recovery made him sound flippant.
   Even the left-wing Liberation daily weighed in. "He kept repeating 'all
   the tools are on the table' as if all we need to do is wait for 2015
   for the country to recover," it wrote in an editorial.
   The hard-left Left Party's national secretary Francois Delapierre said
   Hollande sounded like "a scratched record."
   Hollande unveiled his initial 75 percent tax during his campaign for
   the May 2012 election to show people fed up with economic gloom that
   the rich would hurt too.
   Business leaders see it as unfair the tax will be shunted onto them
   while sports stars and celebrities on huge incomes will likely escape
   it. A promise by Hollande to lighten taxes on the sale of small
   businesses was not enough to soothe them.
   "He said during his campaign he wanted a specific tax for the
   wealthiest French. Now we have something completely different with
   companies being taxed. What about the richest French who do not work in
   companies, like entertainers?" asked Medef's Parisot.
   The government gave no details beyond Hollande's statement that
   shareholder meetings at big companies would be asked to look at
   earnings. "When they exceed one million euros, the company will have a
   contribution to pay which, all taxation added together, will come to 75
   percent,'' he said.