From his first televised speech, Michel Barnier stated that he would not rule out implementing more “tax justice”. This assertion raises two questions. What does it mean? Is it justified? The answer to the first of these questions is easy. It involves increasing taxes on our fellow citizens who have the highest incomes and/or assets. Who are we talking about in concrete terms? There is no absolute definition of wealth, which, in a society, is a relative concept. We are rich when we are richer than others. Also, François Hollande could set the wealth threshold at an income of around 4,000 euros net per month, since this figure limits the 15% of the wealthiest French people.
Michel Barnier probably does not have such a broad definition, perhaps targeting the 1%, or even the 0.1% of the richest French people. If the government expects additional public revenue from this kind of “tax justice”, it will be disappointed. As I have recalled in these columns, France has already passed, as far as taxation of income and assets is concerned, the “Laffer point” beyond which any tax increase has marginal, or even negative, financial consequences.
“Billionaire”, an insult in the ranks of the left
More complex is to know if our country suffers from a lack of fiscal justice, understood as a lack of redistribution. If so, it would not be a question of increasing taxes on the richest to recover revenue but to be more “fair”. In the ranks of the left, it seems that the word “billionaire” has become an insult and that those designated by this qualifier must suffer a fiscal punishment. This simplistic reasoning is inept. There is no moral tradition, whether religious or philosophical, in which wealth is bad in itself. Everything depends on how it was acquired and how it is used. Bernard Arnault, François Pinault, Xavier Niel or Vincent Bolloré are captains of industry who each ensure a significant part of the economic and social development of our country. In the tradition of John Rawls, the enrichment of some poses no problem as long as it does not degrade the situation of others. We don’t know that LVMH or Kering create a lot of misery in France. It would even seem that it’s the opposite.
Let’s look at the economic data now, to gauge the redistribution effort in our country. It appears to be intense and probably unparalleled in the world, apart from isolated cases such as Belgium. France is much more redistributive than Italy or Spain, to take countries that are relatively close to us culturally. In 2023, economists from INSEE published a study that measures redistribution as it emerges from the progressiveness of taxes, the degressivity of certain social benefits subject to resource conditions – the RSA for example – but also the free or almost free public services such as school. It appears that the effects of redistribution are massive. While, before redistribution, the 10% of the richest households receive an income 18 times higher than that of the poorest 10%, this multiple is only 3 after redistribution.
Too much redistribution? A taboo question
This redistribution is also well targeted since among the 15% of our poorest citizens, 95% benefit from net transfers, that is to say, they receive more from the community than they contribute. Retirees are the main beneficiaries, which is logical since most of them do not receive any income from work and their health expenses are higher. Income tax, on the revenue side, and social security benefits, on the expenditure side, have a particularly strong redistributive impact. It is known that 10% of taxpayers pay 75% of the revenue from IRPP, personal income tax.
France is therefore factually a country in which the level of redistribution is very high. It is so high that one could almost ask a taboo question: is it not too high, in the sense that it discourages risk-taking? Is a gap in standard of living of 1 to 3 after redistribution not too low in that it penalizes success? In other words, in the French case, would a little more tax justice not be a little less social justice?
Nicolas Bouzou, economist and essayist, is director of the consulting firm Astères
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