Only inheritances exceeding 100,000 euros per heir are subject to tax, which only affected 15% of the population in 2018.
Eight out of ten French people would be in favour of a reduction in inheritance tax, according to a Odoxa survey for the magazine Challenge of April 25th. Three-quarters of those surveyed even believe that this tax is unjustified. However, this tax concerns a minority of taxpayers: the rich. Lowering it would amount to reducing the distribution of wealth.
Let’s get back to basics: for an inheritance to be taxable, it must exceed 100,000 euros per beneficiary. However, according to INSEE, only 14.6% of parents passed on inheritances exceeding this amount in 2018, indicates The World. We are therefore far from a tax that impacts the entire population. And the distributions differ widely between the different categories of people. Among workers, the share receiving a taxable inheritance is “not significant, as the case is rare”, notes The Observatory of Inequalities in February 2023. “It is 11% among former retired employees (former workers, employees and intermediate professions), excluding senior executives,” adds the institute.
A substantial sum for the State
In addition, more than one retired executive in five has inherited a sum greater than the taxable minimum of 100,000 euros. Among the liberal professions, the rate is 27%, similar to that of heirs who are farmers, artisans, traders and business leaders. However, L’Observatoire notes that “nearly 80% of beneficiaries” of inheritances “belong to the wealthiest 50% in France; a quarter, to the wealthiest 10%”. Being taxed on an inheritance therefore affects the wealthiest sections of society. And this, while nearly 40% of the assets transmitted escape tax, notes the Economic Analysis Council (CAE).
Lowering inheritance tax would harm the poorest. Indeed, according to Le Monde, inheritance and gift taxes brought in 18.5 billion euros to the State in 2022. A substantial sum, even if it is far from income tax (nearly 110 billion euros gross) or VAT (nearly 273 billion euros). However, this money is used by the State to invest in France, whether in infrastructure, the civil service (the State being the largest employer in France) or social assistance.
Inheritance is considered a powerful driver of inequality. According to a 2021 CAE report, it “feeds a dynamic of strengthening wealth inequalities that are much greater than those from earned income.”