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France's Hollande Proposes 75 Percent Tax on Wealthy

France's President Francois Hollande adjusts his glasses after a meeting at the Elysee Palace in Paris, September 20, 2012.
France's new socialist government is calling for higher taxes on the wealthy and big businesses as it attempts to cut its budget deficit and boost its stagnant economy.

In his first spending proposal, French President Francois Hollande proposed $39 billion in savings, with a third of it in spending cuts and two-thirds from higher taxes. Hollande called for a 75 percent tax for the next two years on incomes topping $1.3 million.

Critics say the high tax rate would signal that France does not like rich people. But French Prime Minister Jean-Marie Ayrault defended the fairness of the budget proposal, and said it's a fight against the debt.

"Ninety percent of French taxpayers who will have the same income won't pay more taxes," said Ayrault. "It is a guarantee we are giving to the French people. But it is true that we are asking the richest people to make an effort. It is 10 percent of the taxpayers who will pay more, the rich 10 percent and amongst them one percent of the richest. So the necessary effort we are asking is fair."

France, behind Germany, has the second largest economy in the 17-nation euro currency bloc, but its economic fortunes have stalled and unemployment is at a 13-year high, above 10 percent.

Some information for this report was provided by AP, AFP and Reuters.