The update of work by France Stratégie on the effects of two major recent tax reforms – the transformation of wealth tax (ISF) into real estate wealth tax (IFI) and the introduction of the single flat-rate levy ( PFU) on income and capital gains – confirms some trends observed in a series of three reports published between 2019 and 2022.
Updating the supporting data, the capital tax reform evaluation committee, in charge of these surveys, notes in particular that since the transition from the ISF to the IFI, the number of tax expatriations of households French subject to taxation on wealth has fallen, while that of impatriations has increased.
More returns than departures in France since 2018
So good ” that since 2018, the number of returns from households taxable to the IFI has exceeded the number of departures (380 versus 220 in 2020), while the opposite was observed for flows of taxpayers to the ISF (470 versus 1,020 in 2016) “. Since 2011, the flow of departures had until then always been higher than that of returns, the report indicates.
In other words, the disappearance of the ISF in 2018, intended to reduce the tax burden on the richest households to encourage them to invest more in the economy and limit their tax exile, would therefore seem to produce part of the expected effects of reform.
But such conclusions remain hasty for the time being. The experts from France Stratégie note that the evolution of the expatriation-impatriation balance relates to small numbers, ” of the order of a few hundred, compared with the approximately 150,000 taxpayers subject to the IFI », therefore insufficiently representative to establish a causal link between the reform of the IFI and the slightest tax exile.
What effects will the end of the ISF have on investment and business financing?
In its 3rd report, published last year, the France Strategy committee focused on the argument that the abolition of the ISF would be beneficial for investment and business performance. “ It seems difficult to highlight such an effect, when we compare the behavior of companies very affected by the abolition of the ISF (particularly ETIs) with that of companies with little or no concerned, considered the authors of the report. On the other hand, this first work shows that companies whose shareholders were mostly capped at the ISF (i.e. the most affluent, Editor’s note) distributed fewer dividends, and less often, and that it is for these companies that the probability of paying dividends increased the most in 2018 »
In its note on the updating of its data, the committee repeats, as last year, that ” observation of major economic variables – growth, investment, flows of household financial investments, etc. – before and after the reforms is not enough to conclude on the real effect of these reforms. In particular, it is not possible to estimate by this means alone whether the abolition of the ISF has allowed a reorientation of the savings of the taxpayers concerned towards the financing of companies. Fluctuations in aggregate variables result from the addition of multiple factors, of very diverse natures, in particular since 2020 with the crisis linked to the Covid-19 pandemic “, he underlines.
To shed more light on the effects of these reforms, new research projects were launched in the spring of 2022. Entrusted to the Institute for Public Policy (IPP), the results of this work should feed into the next report of the committee. Assessment of Capital Tax Reforms, to be published in October 2023.