Withdrawal of the ISF: the results are clearly positive

It was a promise from Emmanuel Macron, the reform of the ISF would be evaluated to really know the effects.

With hindsight, the results are clearly positive.

This assessment emanates from France Strategy, an organ attached to Matignon, but it was carried out by a group of economists, trade unionists, representatives of employers and the administration which ensures it a non-partisan character.

This is a detail that matters because we know very well that everything related to the ISF is highly flammable politically.

The most spectacular in this report is the fall in the number of tax exiles.

Tax exile had peaked in 2013-2014, in the wake of the election of François Hollande, with 900 departures of wealthy taxpayers per year.

In 2018, under the effect of the reform, the number of departures fell to only 163.

And there have even been more returns.

For the first time, there were more returns than departures.

The return of wealthy households (there were 240 in 2018) also means more tax revenues for the State.

This trend reversal is also the consequence of another reform: the introduction of what has been called a "flat tax" on capital income, that is to say a single flat rate of 30%. on income from shares, bonds etc.

Thanks to these two reforms, flat tax and ISF, France has returned to the average for developed countries in terms of capital taxation.

"France is falling into line," says the report from France Stratégie.

It no longer scares great fortunes away.

Even if, overall, we still have the highest level of compulsory levies in developed countries: there is still some way to go to come back to the average.

The end of the ISF was also supposed to redirect savings towards businesses.

By keeping only a tax on real estate wealth, the idea was to influence behavior so that the great fortunes invest more their money in companies than in stone.

On this point, it is still too early to conclude.

The effects are still difficult to measure.

What is certain is that the taxation on capital is less penalizing than before.

It is not yet a factor of attractiveness, let's not exaggerate, but it is no longer the foil that we have known.

We must especially hope that the next presidential campaign will not wake up the old debate on the re-establishment of the ISF.

Emmanuel Macron has consistently resisted on the subject, despite pressure from his own majority.

On this subject of the ISF, demagoguery is never far away ...