Tuesday, January 8, 2019

the 20% of the richest French, losers of the post-crisis decade

Emmanuel Macron, president of the rich? Not all the rich, in any case. The temptation of the government to abandon the abolition of the housing tax (TH) for the 20% of the wealthiest French by 2021 could leave a bitter taste to this category of population.

Taxes: the 20% of the richest French, losers of the post-crisis decade

First, because it is a tax boost of 7 to 10 billion, which would have benefited the single with an income of 27,000 euros annually as the couple with child emargeant 49,000 euros. Above all, because such a decision would come to conclude a decade that has made these French losers decisions on tax deductions.

"If we put aside the very rich, we can consider that these 20% of wealthy French are part of the forgotten current socio-fiscal policy, alongside some very poor households, while they had already been most used between 2008 and 2016 », summarizes Pierre Madec, economist at the OFCE and co-author of the report "Socio-fiscal reforms in 2008-2016" published as part of INSEE's "Social Portrait 2018".

Tax shock

These higher social categories have indeed been at the forefront of the tax shock that occurred after 2010: the creation of a 45% income tax bracket (IR), freezing of the IR thresholds from 2011 to 2013, ceilings of the family quotient, increase of the levies on the income of the capital or increase of the old-age contribution for the employees of the private ...

A non-negligible list, which partly saved the middle classes (thanks in particular to the abolition of the first tranche of IR in 2015) or the modest households (thanks to the revalorizations of the minimum social or to the creation of the activity premium ). On the other hand, "The average disposable income losses are significant for households belonging to the 35% most affluent", as noted in the report for the years 2008-2016. The decline is highest for the richest 5% (-5.1%), but it is above 2.5% in general for the 20% of the richest French, against increases for half of the most modest French.

Retired big losers

Since the arrival of Emmanuel Macron in power, the situation is very contrasted. There is a small part that earns a lot, the 2% of the wealthiest French who benefited from the reforms of the taxation of capital (ISF, flat tax). "For the remaining 18% of this class of population, the differences are clear between the assets that benefit from a strong impact of lower payroll taxes on their payroll, and retirees who will lose a lot with the rise in CSG ", notes Pierre Madec.

In a study published in the autumn, the Institute of Public Policy (IPP) calculated for its part that the impact of the budgets 2018 and 2019 would be overall negative for these 20% of wealthy French (with the notable exception of 1% the wealthiest, who will be the biggest winners). On the other hand, the only assets in this category of population should benefit from a small gain in disposable income, although less than that of the middle classes. "There is still a problem of readability and understanding", believes Pierre Madec.

More progressivity

In the end, this decade will have in any case changed the progressivity of the French tax system, according to the data collected by the research center World Inequality Database. If we compare with 2010, the 20% of the wealthiest French are taxed more strongly according to their income compared to the members of the middle class. Even the situation of the 0.01% of the richest French is less advantageous compared to 2010 despite the Macron five-year capital tax reforms, even if they continue to benefit from a lower total tax rate than 90% of French people.

Renaud Honoré

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