This podcast will assess from a political economy perspective the French Solidarity Wealth tax. In order to do so, the rationale behind its implementation in 1982 will be presented as well as the arguments that have favored its abolition in 2017 by President Emmanuel Macron.
Picture: Zakaria Abdelkafi, AFP (https://www.francetvinfo.fr/replay-radio/c-est-comment-ailleurs/c-est-comment-ailleurs-limpot-sur-la-fortune-en-espagne-et-en-suisse_3044207.html).
Abstract
In 2017, President Emmanuel Macron repealed the French Solidarity Wealth tax (in French: Impôt de solidarité sur la fortune or ISF), in order to support investment, employment, innovation and economic growth in France. The ISF had to be paid by individuals whose estate exceeded the taxation threshold which was set at 1 300 000 EUR. This decision triggered a strong discontent among the lower-middle class, which has been captured by the yellow vests movement. The public pushback against the suppression of this specific tax may be very surprising as the economic consequences of the ISF were very disappointing. The deep nature of the dissatisfaction was eminently symbolic, as this wealth tax has been raised as a political symbol of the left-right ideological divide on taxation. President Emmanuel Macron chose to honor the individual freedom to enrich oneself and refused to reintroduce the ISF. By doing so, he confirmed the image of being a « President of the rich ». This determination in pursuing important fiscal reforms while ignoring popular opposition will certainly have political consequences, which will be assessable during next presidential elections that take place in April 2022.
Bilbiography
Agnew, H. (2018). French government opens door to wealth tax concession. Financial Times. Available at: https://www.ft.com/content/79d9c18c-f87b-11e8-af46-2022a0b02a6c.
Alvaredo, F., Chancel, L., Piketty, T., Saez, E., Zucman, G. (2018). World Inequality Report 2018. Available at: https://wir2018.wid.world/.
Banting, K. (1991). The politics of Wealth Taxes. Canadian Public Policy, 17(3), 351-367. Available at: https://www.jstor.org/stable/3551641?seq=1#metadata_info_tab_contents.
Bird, RM. (1970). The Tax Kaleidoscope: Perspective on Tax Reform in Canada. Canadian Tax Journal, 18. Available at: https://heinonline.org/HOL/LandingPage?handle=hein.journals/cdntj18&div=60&id=&page=.
Boadway, R., Chamberlain E., Emmerson C. (2008). Taxation of Wealth and Wealth transfers. The Institute for Fiscal Studies. Available at: https://www.researchgate.net/publication/253405866_Taxation_of_Wealth_and_Wealth_Transfers?enrichId=rgreq-fc5021514a5cc8ac381f2a660cbf6a02-XXX&enrichSource=Y292ZXJQYWdlOzI1MzQwNTg2NjtBUzoxMTQ5MzE5NjE3MDAzNjFAMTQwNDQxMzMyNTA5NA==&el=1_x_3&_esc=publicationCoverPdf.
Bunn, D. (2021). What the U.S. Can Learn from the Adoption (and Repeal) of Wealth Taxes in the OECD, Tax Foundation. https://taxfoundation.org/wealth-taxes-in-the-oecd/.
Drometer, M. Frank, M. Pérez, M.H. (2018). Wealth and inheritance taxation: An overview and country comparison. CESifo DICE Report, 16(2), 45-54. Available at: https://www.researchgate.net/publication/327222644_Wealth_and_inheritance_taxation_An_overview_and_country_comparison.
Edwards, C. (2019). Taxing Wealth and Capital Income. The Cato Institute. Available at: https://www.cato.org/tax-budget-bulletin/taxing-wealth-capital-income.
Hansson, A. (2002). The Wealth Tax and Economic Growth. RePEc. Available at: https://www.researchgate.net/publication/5096483_The_Wealth_Tax_and_Economic_Growth.
Limberg, J. and Seelkopf, L. (2021). The Historical Origins of Wealth Taxation. Journal of European Public Policy. Available at: https://kclpure.kcl.ac.uk/portal/en/publications/the-historical-origins-of-wealth-taxation(9a2f2d26-1459-4a03-8d63-daff7ed75bf9).html.
Merle, P. (2018). La suppression de l’impôt de solidarité sur la fortune : réforme économique ou idéologique? Revue de la régulation, 24(2). Available at: https://journals.openedition.org/regulation/13582.
Ministère de l’Economie, des Finances et de la relance. (2021). Impôt de solidarité sur la fortune – impôt sur la fortune immobilière. Available at: https://www.data.gouv.fr/fr/datasets/impot-de-solidarite-sur-la-fortune-impot-sur-la-fortune-immobiliere/.
Musgrave, R. and Peacock, A. (1967). Classics in the Theory of Public Finance Macmillan. Available at: https://desmarais-tremblay.com/Resources/Musgrave%20Peacock%201958%20Classics%20in%20the%20Theory%20of%20Public%20Finance.pdf.
Organisation for Economic Co-operation and Development. (2018). The Role and Design of Net Wealth Taxes in the OECD. Available at: https://www.oecd.org/ctp/tax-policy/role-and-design-of-net-wealth-taxes-in-the-OECD-summary.pdf.
Palier B. (2010). Path dependence (Dépendance au chemin emprunté). Dictionnaire des politiques publiques. Presses de Sciences Po (P.F.N.S.P.), 411-419. Available at: https://www.cairn.info/dictionnaire-des-politiques-publiques–9782724615500-page-411.htm.
Pichet, E. (2008). The Economic Consequences of the French Wealth Taxes, La revue de droit fiscal, 14, 2-25.Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1268381.
Piketty T., Saez E., Zucman, G. (2018). Distributional National Accounts: Methods and Estimates for the United States. The Quarterly Journal of Economics, 133(2), 553–609. Available at: https://academic.oup.com/qje/article/133/2/553/4430651.
Saez, E. and Zucman, G. (2016). Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data. The Quarterly Journal of Economics, 131(2), 519-578. Available at: https://academic.oup.com/qje/article/131/2/519/2607097.
Recent Comments