France to scrap tax cap for the rich

Critics say the cap, which ensures that no one pays more than 50 percent of annual earnings in tax, is a sop to the rich at a time of belt-tightening across Europe.

Prime Minister Francois Fillon said in a speech Thursday that the tax cap had been "an imperfect remedy" for the heavy tax burden on the rich and will be abolished in a sweeping tax reform this year.

The reform will maintain a wealth tax that has also come under fire, Fillon said. The wealth tax is based on overall assets, and rising property prices have pushed some middle-income families over its threshold.

Tax reform is a top government priority this year and may serve as an awkward bookend to Sarkozy's presidential term. This tax reform may be the last big initiative by Sarkozy before presidential elections next year.