In France, the more money you earn, the more taxes you pay. At least in theory.
More than 80 billion euros: thanks to income tax, the State collects significant revenue each year, which has been increasing constantly for ten years. However, the number of taxed and untaxed households is stable: 18 million people are liable and 22 million exempt.
The principle of income tax is simple: the more you earn, the more you pay. A reality that is true… except at the very top of the hierarchy, where the very (very) rich pay less than they should. However, it is completely legal.
A study carried out by the Institute of Public Policies attests that for the 42,000 richest households in France, the level of taxation on income is… decreasing as income is higher. In this segment of very well-off French people, the richer you are, the less you pay. So much so that the 75 richest households in the country, billionaires according to the authors of the study, have a very low income tax rate.
The evaluation even allows us to estimate that it is lower than that of 99% of French people liable for income tax. Indeed, the figures indicate that these 75 people only pay 0.2% income tax (2016 statistics), which is much less than the vast majority of taxpayers.
However, this is not tax evasion. They simply benefit from legislative generosity on taxation which allows them to reduce the amount of their debt to the tax authorities.
It’s simple: these people are shareholders of companies making a lot of money. However, the profits are not collected by the person but left on the account of a company. Thus, as the taxpayer does not put the money directly into his or her pocket, it is not subject to income tax but to the much lower corporate tax.
However, taking into account income tax and corporate tax, these 75 large fortunes declared to the tax authorities at least 15 million euros of income in 2016 (year of the study data), according to calculations from the Public Policy Institute. So they paid, at a minimum3 million euros in taxes for that year (26% total tax).
But the score could have been much higher. The income earned, taking into account the company profits that they did not pay themselves, amounts to at least 150 million euros. The analysis estimates that if these profits were taxed like any income tax, the overall tax rate would rise to 59% and the tax notice would then be much higher: at a minimum 88 million euros.
The authors therefore call for studying “in detail” the “different tax reform options that would remedy the regressivity” of the tax on very large fortunes.
Emmanuel Macron, for his part, said he wanted to “avoid the idiot trap of the debate on the taxation of the rich”, particularly with a view to the ecological transition. “If we had the employment rate and the unemployment rate of Germany, we would create more wealth and we would not raise the question of financing,” he said during a council of ministers.