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French study points to widening rich/poor gap

PARIS (Reuters) - The incomes of France’s top earners rose much faster than the average in the three years to 2007, according to statistics released on Friday that add fuel to a growing debate over tax breaks for the rich.

A homeless man sleeps on a street during winter in Bordeaux, southwestern France December 23, 2009. REUTERS/Regis Duvignau/Files

A study by national statistics office INSEE pointed to a widening disparity between the richest sections of the population and the rest, with the biggest increases seen by the top 0.01 percent.

“The population overall has become poorer in comparison with very high revenue earners, who have seen much stronger average increases,” INSEE said.

It said that between 2004 and 2007, the top one percent of the population saw its share of total revenue rise 9.1 percent, while the remaining 90 percent saw its share fall 0.9 percent.

In a separate study, INSEE said 8 million people, or 13.4 percent of the population, were living under the poverty threshold in 2007, defined as monthly income of 908 euros ($1,225), with more than one in three immigrants defined as poor.

The figures coincided with a controversy over rules limiting the overall tax burden any person must pay in France to 50 percent of their total income, a measure introduced by President Nicolas Sarkozy when he came to power in 2007.

The government says the limit is needed to reward hard work and ensure that top performers in business and other fields are not forced out of France. Critics say it is a measure that mainly helps a small number of very rich people.

Although Sarkozy has declared he will not back down on what is one of his flagship tax measures, many in his own camp have questioned recently whether the measure can be justified at a time of rising economic hardship and unemployment.

“MOST WELL-OFF” RISE MOST STRONGLY

Added to recurring controversies over high executive pay and bank bonuses, the issue has gathered momentum following a heavy defeat for Sarkozy’s centre-right party in regional elections last month.

INSEE noted that the bottom 90 percent saw their income increase by an average of 9 percent between 2004-2007, while the top 10 percent saw income rise by 11 percent in the same period.

But the incomes of the top one percent rose much more strongly, with increases accelerating higher up the scale.

The study found that the “well-off”, earning between 84,500-225,800 euros a year, saw their income advance by 16 percent during the period.

The “very well-off”, earning between 225,800-687,900 euros, saw their income rise by 27 percent, while the “most well-off”, 0.01 percent of employees who earn half their revenue from capital, saw their income go up by 40 percent on average.

In a related study, INSEE said the top one percent of salary earners in the private sector, some 133,000 people, earned an average of 215,600 euros ($290,800) a year. Most were senior company executives and workers in the finance sector.

Although there have always been big differences between the rich and poor, France has traditionally had a more ambivalent attitude to money than countries such as the United States, with much more disapproval of flagrant displays of personal wealth.

editing by John Stonestreet

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