Barthélémy Philippe 06:15, 07 June 2023

While Emmanuel Macron has ruled out the restoration of the ISF to finance the ecological transition proposed by his former economic adviser Jean Pisani-Ferry, a new report from the Institute of Public Policy, based on the tax declarations of households and companies in 2016, shows that the overall tax rate declines from a certain level of income.

A new report from the Institute for Public Policy shows that the overall tax rate declines above a certain level of income. The study takes as a reference the tax returns of households and companies in 2016. But how to explain this phenomenon?

The overall tax rate peaks at 46%, for the wealthiest 0.1% of households. Beyond that, the share of taxes as a proportion of income declines to only 26%, for 75 ultra-rich households, whose average incomes reach 1 billion euros per year.

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"A group that pays very little tax"

Clément Malgouyres, co-author of the study, is a researcher at the Centre for Research in Economics and Statistics. "This is a group that effectively pays very little income tax and most of its income is taxed as corporate tax. The main mechanism at play is that the taxation of corporate income is much lower than the personal taxation of income," he said.

However, Emmanuel Macron has lowered the maximum corporate tax rate from 33% to 25% since 2017. "It most likely accentuated the degressivity at the very top of the distribution, but the taxable profits of companies were very dynamic over the period," he adds. "And that can be a reaction to the rate cut." In 2022, corporate tax brought in a record €60 billion to the state.