Why the richest French are taxed comparatively less than others
at the top of the pyramid of wealth, tax to retreat. That’s the conclusion of a study by the Institute for Public Policy (IPP) released on Tuesday. Income of 37,800 families The richest French people Subject to a tax comparatively lower than that of the rest of the population. The four authors of the IPP note note that, based on 2016 data, “all personal taxes remain progressive until a high income level.”
But they noted that a “strong decline in the overall tax rate” crossed the threshold of the richest 0.1% of French. However, the memorandum does not take into account the effects of the reforms that have taken place since 2016, such as reducing the corporate tax rate from 33.3 to 25%, and replacing the Internal Security Forces with Real estate tax Or introduce a flat rate tax of 30% on capital income.
Profits of the companies involved
According to the study, the 37,800 richest French families, which earn more than 627,000 euros a year, have an overall tax rate of 46%. But that rate decreases as the incomes of these wealthy people increase, reaching 26% for the 75 richest households taxed. This is explained by the composition of income: the income of the wealthiest French comes mainly from undistributed corporate profits, which are therefore subject to corporate tax (IS) rather than income tax (IR).
“This conversion from the IR’s taxable income base to the IS’s taxable income-only base is not neutral,” the IPP insists. « By this biais, the taux des impositions assises sur le revenu et le patrimoine personnels, situé au more haut autour de 59%, est remplacé par le two plus bas de l’IS, de 33.33% en 2016 », expliquent authors.
tax contributors
But “we should not conclude that France is a tax haven for more billionaires than our neighbours,” warns Laurent Bach, co-author of the note. The Dutch, Swedish and New Zealand tax systems also feature “a form of regression at the top of the income distribution,” the IPP details. While a recent report by economist Jean Pisani-Ferry tentatively suggested restoring some form of wealth tax to fund costly investments in the green transition, this type of tax “cannot correct the decline we are documenting,” the authors warn.
On the other hand, the IPP considers that “it is possible to tax the undistributed income of holding companies with personal income tax” to seize part of the resources of the super-rich who evade taxes. “If holding taxation is shown to generate new forms of improvement, we could consider taxing individual shareholders residing in France on all results not distributed by controlled companies,” adds the institute. A hypothesis that hardly charms the government, Percy The belief that retained earnings are “generally reinvested in the jobs and growth” of companies.
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