“Every billionaire is a political failure,” Oxfam wrote recently. “They are vampires”, engaged Marine Tondelier, from Europe Ecologie Les Verts. To hear these powerful voices of economic science, we had almost ended up doubting it. But no, it is now established: French billionaires do pay taxes. Billions of euros in taxes, even. Not much via income tax (IR) or wealth tax, mainly via corporation tax (IS). An unprecedented study, conducted in collaboration with the tax authorities by the Institute of Public Policies (IPP), an academic research center attached to the Paris School of Economics, documents for the first time the overall tax rate applied to “economic income” of the French, including the richest.
Teachers at Essec, the Ecole des Hautes Etudes en Sciences Sociales or CREST-CNRS, the four authors of the study – Laurent Bach, Antoine Bozio, Arthur Guillouzouic and Clément Malgouyres – forged this original concept which allows approach the effective contribution of households as closely as possible. “Economic income” is defined by all of the income earned and controlled by the taxpayer: in addition to his traditional tax income (salaries and income from movable property in particular), it includes profits that are not distributed, in the form of dividends, by the companies in which he is a shareholder and which he controls. For the first time, the IPP team had access to household and business tax data for an entire year (2016), which allowed it to know, in strict statistical secrecy, the personal tax situation, for income tax and wealth tax (ISF), individual reference shareholders in French companies. And why does that change everything? Because the authors were able to add to the IR and ISF of these shareholders the corporation tax they had paid, in proportion to their shares in the company.
26% global tax for the richest
The main conclusion of the study, widely relayed for 24 hours, is that the overall tax rate, supposed to be progressive, decreases among the richest. Around 600,000 euros of annual economic income, it is at its zenith: 46% of this sum goes to the tax authorities. This means, and it is less said, that the progressiveness of the tax works perfectly for 99.9% of taxpayers. But beyond that, in 37,800 households, it begins to decline. Among the 0.0002% of the very, very, rich located at the very top of the scale, ie 75 households, the famous billionaires, it even drops to 26%. The reason ? As they climb into the upper echelons of wealth, “tax households receive more and more income through the profits of the companies they own, without deciding to distribute all these profits among themselves”, note economists. It then follows “a transfer from a base of income taxable to the IR to a base of income only taxable to the IS.” And since the CIT rate (33.33% in 2016) is lower than the tax rate based on personal income and wealth (59% maximum), billionaires are doing relatively better than households. to 600,000 euros per year.
France, no more generous than its neighbors
However, researchers are careful not to draw too hasty conclusions. First, they point out, the regressivity of the tax at the top of the pyramid is “similar in most European countries.” France is therefore no more generous than its neighbors with regard to very large fortunes. Secondly, corrective measures seem possible, such as taxing more the holding companies towards which these profits converge. Or directly tax the physical shareholders of these holding companies. Subject, however, to a few minor precautions. “Taking into account the principles of constitutional law and European law, the degree of international coordination, as well as the possible behavioral responses of the wealthiest French tax residents, are essential to designing reforms that actually lead to the objective sought by the legislator”, warns the IPP.
Twenty billion euros for public finances
The last lesson of the study is not explicit. Yet it is eye-catching. Asked why the overall amounts of taxes paid by each category of taxpayers do not appear in this work, Antoine Bozio, the president of the IPP, mischievously invites everyone to “do their own calculation, using of a rule of three”. Of which act. In 2016, the 75 wealthiest taxpayers had an average economic income slightly above 1 billion euros on which they paid 26% tax, essentially, as we have seen, under corporate tax . This represents 19.5 billion euros in revenue for public finances. The equivalent of a quarter of the total collection made that year via income tax from… 16 million households. Never, to date, has such a precise figure, on such a targeted population, been put on the table.
We can judge that the account is not there and invite the public authorities to reintroduce more progressiveness on the last link of the chain. But to speak of France as a den of “vampires” or a tax haven for billionaires hardly resists the simple observation of the tax fact. Remains the ideological posture, always practical to evade the debate.