sing several administrative datasets, I study the impact of temporary tax on top
wage income earners, implemented for 2013 and 2014 only and known as the “75%
tax above e 1m”. The tax is nominally paid by the firms. The tax base is gross annual
salary income above one million euros and the top marginal tax rate on wage earners
increased from 64% to 74% because of the tax. About 400 employers paid the tax each
year and about 1000 employees were concerned. I document that the tax was largely
borne by employers, who paid 80% of the tax. Taking advantage of the short term na-
ture of the tax, I show that the tax triggered important optimization response of wage
earners, taking the form of time-shifting. I do not see any income-shifting nor any mi-
gration response. I study the elasticity of the pre-tax labour income to the net-of-tax rate
(1 minus the marginal tax rate) and find an elasticity of 0.3, that I interpret as pure opti-
mization. The firms were also affected by the tax through a decrease in the total number
of employees and demonstrate some evidence of optimization behaviour.