- The Washington Times - Sunday, April 8, 2012

PARIS | Presidential candidate Francois Hollande, leading in polls but lacking in ideas that stick in French voters’ minds, finally dropped a bombshell: As president, he would levy a 75 percent tax on anyone who makes more than $1.33 million a year.

The flashy idea from the normally bland Socialist proved wildly popular, fanning hostility toward executive salaries and forcing President Nicolas Sarkozy to defend his ostentatious friendships with the rich.

It also unleashed debate in the French press about whether the wealthy would decamp for gentler tax pastures.

As much as France likes the plan, it does not seem to have assured Mr. Hollande’s victory, which is growing more uncertain as Mr. Sarkozy reaps the benefits of projecting presidential mettle after France’s shooting attacks.

Polls put the two men neck and neck in the first round April 22 and show Mr. Sarkozy gaining on Mr. Hollande for the decisive runoff May 6.

Centrist candidate Francois Bayrou has dismissed the plan as absurd. He contends that when all is added up, the top bracket would be taxed at nearly 100 percent.

Many economists also are scratching their heads over the tax - seeing it as dangerous at worst and ineffective at best - and even Mr. Hollande acknowledges that it is not meant to balance the budget.

Still, the “Fouquet’s tax” - so named by some in the press after the tony restaurant where Mr. Sarkozy celebrated his 2007 presidential win - is riding and in part fueling a resurgence of the French left.

The tax-the-rich proposal has garnered as much as 65 percent approval in some polls.

French sensibilities on wealth

All that has helped Mr. Hollande, often perceived as amiable but uninspiring, to distinguish himself from his main opponent, said Jean-Daniel Levy, a pollster and political analyst.

“Nicolas Sarkozy has a double difficulty: On the one hand, he is perceived as a president who is close to the rich, which is not a good sign in France. And he is also seen as a president who oversaw inegalitarian policies,” he said.

The tax, Mr. Levy added, “allows Francois Hollande to take control again and to paint a negative portrait of Nicolas Sarkozy.”

But there is a danger that Mr. Hollande hit the nerve too well.

Many voters have swept right past Mr. Hollande and into the camp of far-left candidate Jean-Luc Melenchon, who has electrified voters with calls for a new French revolution and who some polls say will come in third or fourth in the first round of elections.

That could bleed support away from Mr. Hollande in the first round, depriving him of crucial momentum going into the second one.

Antipathy for the rich is widespread in France, where wealth is meant to be discreet and climbing the social ladder to build yourself a mansion isn’t a common narrative.

Mr. Hollande once famously declared, “I do not like the rich.”

The statement boosted his political standing among those who think wealth should be redistributed instead of accumulated.

After his 75 percent tax announcement, front pages treated the rich like some strange, migrating species, declaring that they would decamp to Belgium if the tax is put into place.

One presidential candidate, Dominique de Villepin, himself quite wealthy, warned France not to “kill the goose that lays the golden eggs.”

Although there is anecdotal evidence to suggest that the wealthy are eyeing the border, tax lawyer Sandra Hazan said there is nothing new in rich people fleeing France. But they don’t pull up the stakes simply because taxes are high.

“The problem is not the level of taxation you suffer,” said Ms. Hazan, who heads the tax department at law firm Salans. “The problem is when you cannot anticipate how much you will be paying.”

‘Bling, bling’ versus ‘morality’

The French tax code has long been unpredictable, she said, but it has become even more so in recent months.

As Mr. Sarkozy’s administration has tried to keep a series of budget targets that are central to his credibility and reassure markets that France can manage its debt, the number of changes to tax law have come fast and furious.

When he put taxes at the center of his campaign, Mr. Hollande unleashed a new flood of tax proposals, creating more uncertainty.

Mr. Sarkozy, too, has vowed to hunt down French people who have fled the country purely to escape high taxes and make them pay the difference between what they are paying in their havens and what they would have to pay in France.

In all the discussion about how much the rich make and how much they should pay, Mr. Sarkozy also has been put on the spot - again - about a lavish party to celebrate his presidential victory at Fouquet’s and a vacation on a friend’s yacht he took shortly afterward.

These moves quickly earned him the moniker “President Bling Bling,” and he has struggled ever since to shed the image of a man too comfortable with money.

Five years after the victory party and the yacht trip, Mr. Sarkozy still is fielding questions about them. He most recently defended the vacation in an interview not long after Mr. Hollande’s proposal when he called it a last-ditch attempt to save his marriage to Cecilia, whom he divorced not long after taking office.

But Mr. Hollande has struggled to harness this momentum.

He has failed to provide a coherent narrative for why the tax is needed. He started by saying that, in tough times, the rich had to pay their fair share, before conceding that the tax would bring in only $133 million to $400 million each year. France’s public debt is $2.3 trillion.

Then he said it would put pressure on companies to lower ballooning salaries, noting that executive pay for France’s 40 largest public companies rose 34 percent in 2010, while most of Europe was fighting for its very existence.

In the end, Mr. Hollande has settled on casting the tax as simply the right thing to do. “It’s not a question of return,” he told RTL radio station. “It’s a question of morality.”

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