According to a study by the Institute of Public Policy (IPP) released on Tuesday, the incomes of the 37,800 richest French households are proportionally less taxed than those of the rest of the population. They note “a strong regressivity of the overall tax rate” once crossed the threshold of 0.1%.
The incomes of the 37,800 wealthiest French households are proportionally less taxed than those of the rest of the population, underlines a study by the Institute of Public Policies (IPP) released on Tuesday, which nevertheless considers the reintroduction of a wealth tax ineffective. . “All personal taxes remain progressive (proportioned to income, editor’s note) up to a high level of income”, observe the four authors of the IPP note, based on data from the year 2016.
But they note “a strong regressivity of the overall tax rate” once crossed the threshold of the richest 0.1% of French people. These 37,800 wealthy 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, until it reaches 26% for the 75 wealthiest tax households.
Not a French exception
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). “This transfer from a base of income taxable to IR to a base of income only taxable to IS is not neutral”, insists the IPP. “Through this, the tax rate based on personal income and wealth, at around 59% at its highest, is replaced by the much lower corporate tax rate of 33.33% in 2016” (and 25% currently), explain the authors.
However, this is not a French exception. Studies carried out in Sweden, the Netherlands or New Zealand thus indicate “a form of regressivity at the top of the income distribution”. While a recent report by the economist Jean Pisani-Ferry suggested temporarily restoring a form of wealth tax to finance costly investments in the ecological transition, this type of levy “could not correct the regressivity that we let’s document,” the authors warn.
Recent measures not taken into account
This track of a return of the ISF ruled out, the IPP considers “considerable to tax the undistributed income of holding companies with personal income tax” to capture part of the resources of the ultra-rich who escape tax. “If the taxation of the holding proves to generate new forms of optimization, we could consider the taxation of individual shareholders who are tax residents in France on all the results not distributed by the controlled companies”, adds the Institute.
The study does not take into account the effects of the reforms that have taken place since 2016, such as the replacement of the ISF by a tax on real estate wealth or the introduction of a flat rate levy of 30% on capital income.
Source: Europe1
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