TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, October 9, 2018

NY Times: With Popularity Slumping, Macron Tries Tax Cuts For France’s Working Class

New York Times, Macron, With Popularity Slumping, Tries Tax Cuts for France’s Working Class:

As President Emmanuel Macron presses ahead with the most business-friendly overhaul of the French labor market in decades, his popularity with many of his countrymen has gone into a tailspin. Consumer confidence is falling. A nascent recovery is cooling off. Unemployment has been stuck above 9 percent for months. 

And then there was the encounter with the gardener.

In an exchange that went viral on social media, Mr. Macron was seen as lecturing an out-of-work gardener in Paris to look harder for a job. “If I crossed the street, I’d find you one,” he told the man, prompting a Twitter storm of insults aimed at Mr. Macron, a former investment banker.

That is hardly the vision of France, or of his presidency, that Mr. Macron hoped for when he swept into office 18 months ago with a pledge to revitalize Europe’s third-biggest economy by pursuing work-force reforms that had been stalled for more than a decade.

His approval ratings have slumped, and on Wednesday his interior minister resigned, the third cabinet member to quit in six weeks. Amid the turmoil, the government is trying to shore up support by giving cash back to the working class — with tax breaks next year worth 6 billion euros ($6.9 billion) for middle- and low-income earners — while reassuring investors that his designs for a “new French prosperity” are on track. ...

In his first year, he delivered tax breaks to corporations and to France’s wealthiest 10 percent, earning him a reputation for favoring the rich. Purchasing power fell for the bottom 5 percent of households, while the majority in the middle, about 70 percent, were largely unaffected, according to the French Economic Observatory, an independent think tank. ...

Mr. Macron’s 2019 budget tries to make some amends. It pivots toward those left behind in the previous round of tax cuts, targeting €6 billion in housing and payroll tax cuts at the working class, on top of reductions in employee health care contributions and unemployment insurance payments. A separate plan would set aside €8 billion to tackle rising poverty with aid and job-training programs for disadvantaged youths under 25.

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