This Monday morning, Nicolas Barré explains how the income tax will decline in 2020 while seeing its revenue increase.
Not easy, government communication! Especially when it comes to the income tax that will fall next year, but the revenue will increase.
Yes, in these times when we are in the habit of doubting public speech, Gérald Darmanin and the government in general will have to deploy educational treasures to explain the enigma of the 2019 income tax. He is supposed to to go down by $ 5 billion and yet revenues will increase by $ 3 billion. And this for good and less good reasons. First two good reasons. One: the income of the French is increasing. Wages have increased and the employment situation is better.
So more people pay income tax. Second good reason: the tax recovery rate is better, it reaches 99% thanks to the tax at source. There is less fraud. So more tax revenue.
And the bad reasons?
One bad reason is that the income tax schedule is adjusted by the amount of inflation as incomes grow faster. What does it mean ? That mechanically, every year the income tax is a little more progressive. As thresholds increase less quickly than incomes, there are more and more taxpayers moving from one bracket to another. To this must be added a slightly perverse subtlety of tax reform at source: as you know, we went directly from the taxation of 2017 revenues to those of 2019.
But the scale has been re-evaluated by only 1%, for one year of inflation, while the tax base has increased by 6% at the same time. The tax cuts, the famous $ 5 billion, are concentrated on the first two tranches, the others have the impression that they are told stories telling them about tax cuts. And they are not completely wrong