“It is through work that we build the strength of a nation”, explained Emmanuel Macron at the Rungis market (Val-de-Marne), Tuesday, February 21. The Head of State, who was slaying the « interest » in 2017, has decided to make it the heart of the second five-year term. It is the objective of full employment – therefore work – which justifies the reform of unemployment insurance and that of pensions, which underlies the debate on the sharing of value, and which will be the subject of a text in the spring. However, it is of course on capital that his major tax reforms have focused, with powerful political markers, such as the abolition of wealth tax, which has become a tax on real estate wealth, the creation of the “flat tax” at 30% on financial income and, to a lesser extent, the reduction in the corporate tax rate, reduced from 33% to 25%. So much so that today, even though households have benefited from significant tax cuts since 2017, economists agree that capital, in particular financial capital, is taxed less than labor in the Hexagon.
Thus, a taxpayer earning one million euros in salary will be taxed facially at more than 54% – the marginal slice of income tax amounting to 45%, to which is added 9.2% of general social contribution (CSG) and contribution for the repayment of the social debt (CRDS) -, while a shareholder receiving one million euros in dividends will be 30% (12.8% tax and 17.2% CSG-CRDS, forming 30% of the “flat tax”).
“There have always been round trips on the taxation of capital in relation to labor, but historically, we have never taxed capital gains and dividends so little”, notes a former senior official. To the point that Bercy had, in 2017, feared that the Constitutional Council, which had censored François Hollande’s 75% tax, saw it as a breach of equality before the tax.
Much criticized by the left at the time, these reforms aimed to erase the legacy of the previous five-year term, which had tried to align the taxation of capital with that of labor in 2012, causing a bronca among entrepreneurs. France has since joined the average of other OECD countries when it comes to the wealthiest taxpayers, as a report by France Stratégie in 2021 showed. In most Western tax systems, capital is taxed less than labour, with financial capital being considered more mobile than labour.
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