WSJ reports that French president is under pressure of labor unions to raise taxes on the wealthy as an act of solidarity (link). Meanwhile, France's economy deteriorated significantly in the light of recession and turmoil of the financial crisis. The economy is expected to decline by 1,9 percent in 2009 on the annual basis. The forecasting prospect for French economy in 2010 is also a little grimmy. The IMF expects 0.7 percent economic growth in 2010 (link). The stagnation of France has been diagnosed as a consequence of high tax burden, inefficient and oversized public sector and rigid labor markets which hinder productivity growth and further deteriorate the already unsustainable social security and pay-as-you-go pension system when net financial liabilities increase exponentially in the share of the GDP. The OECD has shown an interesting comparison (link) of tax burden on labor supply in OECD countires. France, Belgium, Hungary and Germany are in the top ladder of tax burden on labor supply, where tax burden on average workers is very close or above 50 percent of labor cost while the OECD average is slightly below 40 percent.
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