The debate on public finances harbors within it a lie which it is time to get rid of: there exists, in France, a hidden tax treasure, and this treasure is held and hidden by the richest people in our country. This lie is widely maintained by the radical left which, as usual, excites minds with untruths.
Thus, it would be enough to “get the money where it is”, that is to say “from the rich”. It is sadder that the right, through the voice of our new Prime Minister, half-heartedly says the same thing: we need more “tax justice” and it is necessary to “request an exceptional effort from the most fortunate.” Understand: let’s take the money where it is because there is some.
Taxing income above 75% is confiscatory
For the new government, this effort involves increasing the “exceptional contribution on high incomes”, a contribution to stubborn exceptionalism since it was created by François Fillon – decidedly, the right and taxes… – in 2012 This additional contribution aims to introduce up to 4% additional levy on income above 500,000 euros for a single person or 1 million euros for a couple. It comes in addition to the maximum taxation of income tax (45%) and social security contributions (9.7%). If we add indirect taxes and local taxes, the marginal taxation of the wealthiest – that which affects the last euro earned – can exceed 70%.
Remember that the Constitutional Council considers that taxing income above 75% is confiscatory, and therefore impossible in our country. For this reason, François Hollande had to reduce his tax to 75%. That someone as serious as Michel Barnier is counting on such a measure to replenish our coffers is a disappointment. The truth is that these high-income households are already stretched thin. Squeezing them further will only hurt them, with no benefit to the country.
The fable of “undistributed income”
So, we are told, if we cannot draw on the income of millionaires, let us use that of billionaires since it would be shamefully undertaxed. A few days ago, on public television, we saw an economist called Lucas Chancel explain that the “ultra-rich” pay a tax of around 2% of their “economic income”. This concept of “economic income”, popularized by economists incapable of thinking about society other than in terms of inequalities, includes what is called “undistributed income”. Billionaires are most often because they hold shares in companies that they have developed to considerable extents, for the greater benefit of France. This is the case with Bernard Arnault, Vincent Bolloré, Xavier Niel and François Pinault.
It makes absolutely no sense to count in their income, as these economists do, the potential capital gains that these captains of industry would realize if they sold their shares. In a state of law, we tax income, not the income that we could receive if we liquidated our stock portfolio or if we sold our main residence. And in the event of an “unrealized” loss, the tax authorities compensate?
Tax success: you will have less success
In France, capital gains are taxed when they are a reality, not a possibility. In the same way, dividends that companies pay to financial structures – “holdings” – which belong to individuals are not taxed under income tax, even if these individuals are multi-millionaires or billionaires. For centuries, the law has separated the notions of “legal person” and “natural person”.
The indigestible intellectual mash of radical left economists does not help the debate and will not improve the situation of our public finances. Lies, approximations, confusion and cowardice will change nothing: there is no fiscal solution to our deficit problem. As for the government, not only will its tax demagoguery strategy be ineffective but it will be counterproductive. Tax carbon: you will have less carbon; tax capital: you will have less capital; tax success: you will have less success.
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