EDITORIAL: The not-so-supertax

Those who believe the United States can tax its way to prosperity should consider the latest news from France. President Francois Hollande had that same belief when he took office in 2012. So he and the Socialist government pushed through a 75 percent “supertax” on individuals who earn 1 million euros or more annually ($1.2 million U.S.).

The tax went into effect in 2013, but would exist for only two years. President Hollande was confident it would refill the government’s sagging coffers and help pay off debt.

Two years later, it hasn’t quite worked out that way, as reported by Eric Randolph of French press agency AFP.com. The tax will expire Feb. 1 — not soon enough for the president and all those suffering through France’s lagging economy.

In December 2012, before the tax even went into effect, France’s highest court ruled it unconstitutional. So, as Mr. Randolph noted, the government countered with an even more anti-business plan in which companies paid the 75 percent rate only for the portion of employees’ salaries above the 1 million euro ceiling. What President Hollande had once proclaimed an “exceptional contribution to solidarity” had become the exceptional dissolution of French businesses. Gerard Ramond, who represents small and medium-sized companies, told Mr. Randolph the tax led to 70,000 businesses going bankrupt in just the past year.

Not only did the tax fail to shift the economic fortunes of the country, it drove businesses and high-earning individuals away. Not exactly the way to broaden a country’s tax base, something President Hollande now realizes as he shifts to more business-friendly policies.

Here in the United States, much of what President Barack Obama favors — regulating the Internet, more tightly regulating energy, even higher taxes on the wealthy — would have similar effects.

France has shown that bad tax policy has bad economic ramifications. The best way to increase funding for government services is to have a growing economy. And the best way to accomplish that is to simplify and broaden the tax base, not impose onerous, targeted taxes on those who create jobs. The Republican Congress should make it so.