The tax on large fortunes, the return?

Audio 4:13

By: Dominique Baillard Follow

President Macron will he restore the tax on large fortunes (ISF)? It is the question of "the day after the pandemic" that is rising in public debate.

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And not only in France: the creation of a tax on the ultra-rich is much discussed at the moment, in the north as in the south, in emerging countries as in the most advanced economies. It was the IMF that lit the fuse. In a recent publication on budgetary issues, the fund recommends the introduction of a tax on large fortunes, presented as a solidarity tax to deal with the explosion of expenses linked to the pandemic. In India, a hundred personalities signed a petition sent to Prime Minister Narendra Modi to demand a 2% tax on the richest 1%. The issue is also topical in South Africa and in many Latin American countries.

Would the wealthiest pay the bill for the Covid-19?

This is the scheme adopted in the United States by the economist Daniel Markovit. He advocates the introduction of a one-time tax of 5% on the richest 5%. Expected revenue: $ 2 trillion, the amount of the first bailout proposed by Donald Trump. As deficits widen and debt swells, raising taxes seems inevitable. But punctuating those who are already hard hit by the crisis, households or businesses would be counterproductive. This is why this tax on the rich, if it is well framed to prevent tax evasion, seems economically the easiest to implement. A trio of French economists - Emmanuel Saez, Gabriel Zucman and Camille Landais, suggest that Europeans create a tax on wealth which is also limited in time. By taxing assets over two million euros, they estimate that the addition of the pandemic would be reimbursed in ten years. In Latin America and South Africa, where the tax rate relative to GDP is much lower than in developed countries, the promoters of this tax also see it as an ideal instrument for correcting income inequalities.

Are governments in favor of this high income tax?

In Latin America, only the Argentine government is really in favor. On the other hand, in Ecuador, Paraguay, Brazil or Chile, a country led by a billionaire president, the proposals put forward by the opposition parties are unlikely to succeed. In South Africa, the discussion is still confined to academic circles. In France the idea is gaining ground in the media; a close friend of former president Sarkozy -Raymond Soubie his social adviser- has trouble seeing how the government can escape it. After his election Emmanuel Macron had hastened to empty the ISF of its substance, he could be tempted by a reverse reverse analysts believe. History to break with the image of president of the rich who sticks to his skin. According to lawyer Gianmarco Monsellato, the tax on the wealthy is not very effective in terms of tax revenue, but it is a powerful political message. And therefore tempting for governments facing economic painful tomorrows. This expert on European taxation, however, considers it unlikely that Europe will convert. She who is already unable to harmonize corporate taxation. Unless he suggests that the United States lead the way. A question which will undoubtedly be part of the debate of the presidential election.

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