Just before the turn of the year, on December 29th, the French Constitutional Council overturned the socialist government’s 75% income-tax rate for the rich, a measure the new occupant of the Elysée Palace, François Hollande, had turned into an anti-rich symbol during his presidential campaign. This is not the first time a flagship campaign pledge of this sort is quashed by a constitutional court. But I would like to use the decision as an opportunity to discuss a question of broader significance for the legitimacy of judicial review in democratic regimes. For someone like me, who sees the best rationale for granting independent courts the power to invalidate legislative enactments as resting on a form of output legitimacy, the ruling raises a somewhat counter-intuitive paradox. Namely, that good judicial technocrats might, by preventing the adoption of bad policies, undermine the deliberative quality of the democratic process.
Whether an income-tax rate of 75% for income over €1m ($1.3 million) is not just bad for the rich but also for the welfare of the nation as a whole is debatable. Starting from the premise that, in a competitive economy, an individual’s marginal contribution to wealth-creation equals her marginal income, distinguished economists have argued that the optimal tax rate for top-earners is somewhere in the region of 70%. Yet policy analysts did not wait to see the world’s fourth richest man, Bernard Arnault, along with movie-star Gerard Depardieu flee to Belgium – which with a marginal income-tax rate of 53% hardly qualifies as a tax haven – to worry about the signal the measure would send to investors and wealth-creators. In fact, there were early indications that many among Hollande’s advisers and fellow politicians in the socialist coalition did not support the policy and anticipated that it would be reversed by a Constitutional Council largely staffed with ageing right-wing politicos ...Zum vollständigen Artikel