A few days after the economist Jean Pisani-Ferry suggested temporarily reintroducing a form of wealth tax to finance the ecological transition, the Institute for Public Policy (IPP) came on Tuesday to throw a new stone in the garden of the executive, which has been working since the arrival of Emmanuel Macron at the Élysée in 2017 to reduce the tax burden.
The incomes of the 37,800 wealthiest French households are proportionally less taxed than those of the rest of the population, according to the conclusions of this study. “All personal taxes remain progressive (proportioned to income, editor’s note) up to a high level of income”, observe the four authors of the note, based on data from the year 2016. But they note “a strong degression of the overall tax rate” once crossed the threshold of the richest 0.1% of French people.
According to the study, the 37,800 wealthiest French households, which receive more than 627,000 euros annually, have an overall tax rate of 46%. But this rate decreases as the income of these ultra-rich increases, reaching 26% for the 75 wealthiest tax households. This is explained by the composition of income: that of the wealthiest French people comes mainly from undistributed corporate profits, which are therefore subject to corporation tax (IS) rather than income tax. income (IR). “Through this, the rate of taxation based on personal income and wealth, located at the highest around 59%, is replaced by the much lower rate of the IS, of 33.33% in 2016”, explain authors.
Similar systems in our European neighbors
“It is now proven, billionaires pay almost no tax”, hastened to react Éric Coquerel, LFI president of the Finance Committee of the National Assembly. But, according to Laurent Bach, co-author of the note, “we should not conclude that France is more of a tax haven for billionaires than our neighbors”. The Dutch, Swedish and New Zealand tax systems are also marked by “a form of degressivity at the top of the income distribution”, details the IPP.
Based on 2016 data provided by Bercy, the “only currently available” according to the IPP, the note also does not take into account the tax reforms that have taken place since: replacement of the ISF by the property wealth tax, introduction a flat-rate levy of 30% on capital income or a reduction from 33.3% to 25% of the corporation tax rate (IS).
The IPP certainly dismisses the very controversial track of a reintroduction of the ISF, deemed ineffective to capture the share of income from the wealthiest households that escapes tax. But he suggests subjecting the undistributed profits of holding companies to income tax, a proposal taken up by Éric Coquerel.
Hardly convinced, Bercy stresses that undistributed profits “are generally reinvested in employment and growth” of companies, and that it would therefore be counterproductive to tax them. The executive believes more in the global minimum tax of 15% on the profits of multinationals, a measure which should be transposed into French law on the occasion of the draft budget for 2024. To tax the ultra-rich, “a viable solution in the long term can only be international”, we slip in Bercy.
The cautious reaction of the government to this study is reminiscent of the attitude it adopted at the end of May when the Pisani-Ferry report was published, which suggested temporarily restoring a form of wealth tax to finance costly investments in the ecological transition. . “We will not raise taxes. We do not think that a new tax, a new tax is the solution “to find the tens of billions of euros necessary to finance the ecological transition, then hammered Bruno Le Maire.
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