It's known as the Impôt de solidarité sur la fortune and, since its 1981 introduction under Socialist president François Mitterrand, the Solidarity Wealth Tax has constituted a dividing line in French politics. If you support it, you must be on the left. If you don't, you are a right-winger.
While the left-right continuum may have outgrown its usefulness in many countries in an era of populist shape-shifters, it remains a fixture in French politics. Emmanuel Macron rose to power aiming to transcend this tired notion. He even created an entirely new political party – Republic on the Move! – turning his back on his old political home, the Socialist Party, all while skewering the stuffy conservatism of the Republican Party and the radical identity politics of the National Front.
Five months into his term, however, the 39-year-old President who turned the old politics on its head has been unable to slough off the French urge to define him in traditional right-left terms. And Exhibit A in this national pastime of labelling the new President – entire magazine spreads, TV talk shows and newspaper features are dedicated to the topic – is Mr. Macron's move to abolish the wealth tax.
Economists on the right consider the tax an ideological relic that, combined with other levies on the rich, has led thousands of well-off citizens to flee the country. For those on the left, the wealth tax is more important than ever in an era of rising inequality.
The Macron administration's first budget, tabled on Sept. 27, moved to replace the wealth tax with a smaller real estate tax on properties worth more than €1.3-million ($1.9-million Canadian). This will free up the financial holdings of the well-off from additional taxation, a measure the government insists will boost the "productive economy." The new property tax would apply to only 150,000 French households and raise €850-million a year, compared with the 330,000 households that are now subject to the wealth tax, which raised €4.1-billion in 2016.
Combined with the adoption of a flat tax of 30 per cent on dividends, interest and capital gains – which currently face a tax rate of up to 60 per cent – the abolition of the wealth tax has earned Mr. Macron yet another nickname among the many flattering and not-so-flattering ones he has already acquired. And it seems his latest moniker – "President of the Rich" – is likely to stick.
French economist Thomas Piketty, who earned worldwide fame with his 2013 tome on the rise of income inequality, denounced the abolition of the wealth tax as a "heavy moral, economic and historic error" in a Le Monde op-ed. "There are other priorities," the author of Capital in the Twenty-First Century intoned, "than giving gifts to those who are doing best."
Mr. Macron has not only moved to slash taxes for the wealthy and corporations, he has adopted a presidential decree to liberalize France's rigid labour code, long-considered a third rail in French politics. He has invoked economist Joseph Schumpeter's theory of creative destruction in his bid to spur French innovation, forcing French workers to give up hard-won privileges.
While Mr. Macron's free-market orientation is hardly a revelation to anyone who has been following the former investment banker's career in recent years, it is nevertheless seen as a betrayal by many of those who voted for him. During the campaign, Mr. Macron's celebrity profile seemed to take precedence over his policies. His pro-European message of inclusiveness and liberal stand on social issues earned him the infatuation of many French progressives.
In power, however, he has displayed a hard-edged authoritarian streak and an empathy deficit. He was filmed this month using vulgar language to criticize workers protesting downsizings, suggesting they should be looking for a job at a plant down the road where openings existed instead of "wreaking fucking havoc." Rather than being caught off guard, however, many analysts suggested the supposedly private outburst was a deliberate attempt by Mr. Macron to ingratiate himself with voters on the right, who had until recently remained dubious of him and his inner circle of ex-Socialists.
Indeed, after blowing up the Socialist Party, which has been reduced to a rump after seeing its voters either defect to Mr. Macron or the far-left France Unbowed, the new President may now be out to destroy his opposition on the right. By usurping the Republican Party's advantage on economic issues, Mr. Macron has left it struggling to distinguish itself from the National Front.
Being called President of the Rich may not bother him at all.