Inheritance tax: why a reform would be explosive for French society

Nicolas Bouzou 10:32 a.m., December 22, 2021

EDITORIAL

Nothing less than a "big bang" for Nicolas Bouzou.

In

Wednesday, the columnist returned to the last report of the Economic Analysis Council (CAE) published Tuesday and which deals with the taxation of inheritances.

According to this note, there needs to be a "in-depth" reform of this tax hated by the French, but which would be a source of worsening wealth inequalities.

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Not the right time to talk about tax

This report is, as always with the Economic Analysis Council, very well documented. It's very precise, but at the same time, it's questionable, and I think it's a little anxiety-provoking. I am not sure this is the right time to talk about taxation. On the findings, the Economic Analysis Council is right. We have an increase in wealth inequalities in France, not income. Income inequalities are stable, but wealth inequalities are increasing.

There is a number given in the report that is quite startling.

When you look at the share of inherited wealth in the total wealth of households, we were at 35% in 1970, we are at 60% in 2020. And therefore, the report proposes a review to make the tax on inheritance more progressive, a broader base, lower rates and therefore more progressivity.

The tax solution is anxiety-provoking

Taxation is already high, but the CAE nevertheless brings two nuances. The first is that the tax is lower for inheritances in the direct line, to the spouse or to the children. And the second is that there are many exemptions. Some seem to me to be perfectly justified, such as the exemption on professional property. However, the inheritance tax remains generally high in France. And then there is also a tax on wealth before inheritance that should not be forgotten, such as the tax on real estate wealth.

This report reproduces a very French bias.

That is, whatever the problem, the solution must be fiscal.

I am not sure that, in the situation in which French society is, the specter of tax reform should be waved again.

Other means to relaunch equal opportunities

There are plenty of ways to relaunch equal opportunities, without increasing taxes.

The role of school, for example.

I was telling you a few days ago about the collapse of the level in mathematics.

It is a catastrophic problem of equal opportunities in France.

There is also the role of the labor market.

The first reason for poverty in France is unemployment.

And then, the question of housing.

We do not have enough housing in France.

We need to build more and this is very important for young people.

Taxation of inheritance is an interesting subject, but it is not a central subject for French society.