France Imposed A 75% Tax On The Highest Incomes: It Didn’t Work And Here’s Why

In a recent interview, Alexandria Ocasio-Cortez stated that the highest income brackets in the US should be taxed at a 70% tax rate. The argument is that this extra income could then get channeled to fund a variety of policies from the so-called Green New Deal to different types of aid for the poor. The problem is that these types of high tax rates have been tried: in France. The policy failed.

In 2012, with great fanfare then French president Francois Hollande announced that all earnings above 1 million EUR were going to be taxed at a 75% tax rate. The policy was supposed to bring a windfall to the French coffers, and make the wealthiest citizens pay up. Just two years later in 2014, the tax was dropped after it had failed to deliver.

The money that was gotten through the tax was quite small, and the projected revenues for 2013 and 2014 were actually down! The government had forecast that in 2013 through all these measures it would be able to collect around 30 billion EUR of extra tax income. What it in fact got was 16 billion, which is 14 billion below the estimated forecast!

This failure forced a change on the post of the Prime Minister, with the new PM Manuel Valls being quoted as saying: “Too much tax kills tax.” The French government did not foresee the…