“Bullshit trap” or threat to the cohesion of the Republican pact?

A study published this week has brought this question back to the fore. It shows that billionaires would be, in France, relatively little taxed. “What taxes do billionaires pay?” : such is the title of this study, written by economists from the Institute for Public Policy. A very clear question, for an answer that is just as clear: “Ithey don’t pay enough” !

Let’s start at the beginning: the originality of this study is that the researchers took into account the income of very wealthy households in their entirety. Not just benchmark tax income – the number we all find out once we’ve finished filing our tax return. But also the profits that these great fortunes voluntarily let sleep in their companies: these are profits made, already taxed, and which have not been reinvested or redistributed to employees. It is not virtual value: it is available money, over which the owners of the companies retain control. The researchers believe that we cannot ignore this.

The richest contribute less than the others, in proportion

The conclusions of the study are instructive. The researchers show that in France, the tax is indeed progressive for 99.9% of French people. At its peak, for households earning around €600,000 per year, it reaches 46% of total income. And then there are the top 0.1%. For them, the tax becomes regressive: the richer they are among the rich, the less they contribute, proportionally, to national expenditure. For the few dozen wealthiest households, the tax only amounts to 26% of their income: 20% less than the maximum rate. And again, we are only talking about the figures for 2016, the only ones to which the economists had access. Since then, Emmanuel Macron has considerably reduced the tax on large fortunes. It is therefore likely that in proportion, billionaires pay, today, even less.

The whole question is whether it is possible to tax this income which remains in the companies. On this point, the economists mention a few leads, while conceding that the measures they suggest could pose serious legal difficulties. The Ministry of the Economy insists, meanwhile, that the households targeted would be “very mobile”, and that it could therefore be counterproductive to seek to tax them more. Unless, of course, the countries of the European Union manage to agree on a single, high corporate tax rate. But, let’s be honest: this doesn’t really seem relevant.

Restore tax progressivity

To correct this injustice, we could start by using the tax on capital and on very high incomes. This would probably not be enough to restore real tax progressivity, but it would already be better than nothing. And that’s good: the room for maneuver is enormous! Last October, France Strategy released its latest report on Emmanuel Macron’s tax reforms. Regarding the abolition of wealth tax and lower taxes on dividends, it is impossible to detect “a real effect on the economy”. It was however the initial promise of the government: “to promote the growth of the fabric of companies, to stimulate investment and innovation”. None of this having happened, logic would require us to put the work back on the job.

Especially since, in a report published a few weeks ago, Jean Pisani-Ferry himself, one of the economists who inspired Emmanuel Macron’s program in 2017, pleaded for an exceptional tax on heritage in order to finance “the green investment wall”. Let us also remember that, according to the latest report from Oxfam, in France, the richest households have tripled their fortunes in the last ten years. All the studies converge, but nothing to do: the government continues to oppose an end of inadmissibility. The President of the Republic even went so far as to speak “from the trap to the con of the debate on the taxation of the rich”.

Today, taxation is objectively unequal. However, research has long shown that consent to taxation is directly linked to its fairness.

[Nous constatons en France] “such a reconstitution of privileges, that one could say of today’s society what Tocqueville applied to the old regime: the object of the tax is not to reach those most capable of paying it, but those most incapable of s ‘defend’.

André Barilari, researcher

in the “French Review of Public Finances” in 2019

An unjust tax, and perceived as such, does not only arouse the anger of citizens. What he directly threatens is the cohesion of our republican pact.