French panel overturns 75 percent upper tax rate, saying it's excessive

Dec. 21, 2012: France's President Francois Hollande, center, gestures as he leaves the Europe 1 radio station after an interview, in Paris. (AP)

PARIS – France's highest court on Saturday blocked President Francois Hollande's plan to tax the ultrawealthy at a 75 percent rate, saying it was unfair.

In a stinging rebuke to one of Socialist Hollande's flagship campaign promises, the constitutional council ruled Saturday that the way the highly contentious tax was designed was unconstitutional. It was intended to hit annual incomes of more than 1 million euros, or $1.3 million.

The largely symbolic measure would have only hit a tiny number of taxpayers and brought in an estimated 100 million euros to 300 million euros - an insignificant amount in the context of France's multi-billion euro deficit.

Prime Minister Jean-Marc Ayrault was quick to respond, saying in a statement following the decision the government would resubmit the measure to take the court's concerns into account.

The court's ruling took issue not with the size of the tax, but with the way it discriminated between households depending on how incomes were distributed among its members. A household with two earners each making under euro1 million would be exempt from the tax, while one with one earner making 1.2 million euros would have to pay.

The French government approved the tax in its most recent budget, amid criticism by some that it would do little to stem the country's mounting fiscal problems and would drive away the wealthiest citizens. Hollande's popularity, meanwhile, has been tanking as the country's unemployment continued its rise for the 19th straight month.

In recent weeks, Gerard Depardieu -- France's most famous actor -- announced his intention to turn in his French passport and move to a village in a tax-friendly Belgium.

Following Depardieu's announcement, Belgium's Foreign Minister Didier Reynders said his country will welcome anyone who wants to follow the actor in escaping high taxes.

Reynders told the French newspaper Le Figaro that France has no one else to blame. The country, he said, should "accept the consequences."

Depardieu, who has already established residency in a Belgian village just minutes from the French border, was recently offered a Russian passport by President Vladimir Putin.

The Associated Press contributed to this report.