France Enters Recession as Hollande Proposes New 66.6% Top Tax Rate
France's economy fell off sharply in March indicating that the nation--whose annual growth was already predicted to be around 0.0% again this year--is about to enter it's third recession since 2009.
The new figures are bad news for socialist President Francois Hollande whose job approval is now at a record low. Hollande has been eager to tinker with the economy. His attempt to pass a 75% top tax rate was rebuffed last December by the French Supreme Court which found the proposal both badly implemented and confiscatory. At the time, Hollande promised to reintroduce the measure, but he apparently decided to back down from that fight. The government now says 66.6% is the dividing line between taxation and confiscation.
In an attempt to downplay his very public backtrack on the tax rate, Hollande is promising to extend government control over executive pay to private industry. France already sets a top rate for state-run businesses which insures CEO's can earn no more than $596,294 per year. It's not clear that France can dictate CEO wages to private industry but it may make other changes to effectively limit executive pay.
All of this fiddling with incomes happens against the backdrop of economic stagnation. France's growth rate in 2012 was 0.0%. That was before French unemployment hit a 16-year high. The EU recently revised it's growth estimate for France to 0.0-0.1% for 2013. But with the nation on the verge of another recession, those figure now appear optimistic.