Grandstand. French taxation on inheritances is inefficient and regressive because there are many exemptions which mainly benefit large transfers. However, our country has long had the ambition to correct its system in order to make it more progressive: the top marginal rate on inheritance has doubled since the 1960s, rising from 20 to 45%. But behind this display, tax loopholes have accumulated, and today, the wealthiest in France only pay about 10% inheritance tax on all the assets passed on to them throughout their life. life. Conversely, inheritance tax weighs on the upper middle classes. It should probably be remembered that 10% of French people inherit nothing, that half of them inherit less than 70,000 euros and that inheritance is very concentrated at the top of the scale. This concentration is not unrelated to the regression observed over the past fifty years: inherited wealth represented a third of French people’s assets in the 1970s, whereas today it represents 60%.
It is the return of the company of the heirs, documented by a remarkable note of the Council of economic analysis (CAE), Rethinking inheritance », published in December 2021. Based on this observation, the authors have formulated several concrete proposals for a “new inheritance policy”. In summary, by removing the four main French tax loopholes, the state could raise more tax revenue and reduce inheritance tax for a majority of French people. In other words, if the posted rates were applied, we could not only improve the yield of this tax (its effectiveness), but also make it truly progressive.
The French situation with regard to inheritance covers several characteristics of the current economic system: a hyper-concentration of assets on a small portion of individuals and companies, and a great capacity of these happy couple to evade taxes through legal tax strategies, based on exemptions or on an artificial transfer to lenient jurisdictions (so-called “tax avoidance”). Many works in public economics accurately document the concentration of wealth at the top of the scale, tax avoidance and the associated loss of tax revenue.
Tax revenues
The economic debate should gradually shift to the macroeconomic consequences of this concentration of wealth and the associated loss of tax revenue. The Covid-19 crisis has reactivated public spending all over the world, without considering the revenue to finance it. In France, for example, the government has tirelessly displayed a desire to “don’t raise taxes”. However, the 10 billion euros in tax revenue that would generate “the new inheritance policy” proposed by the CAE would, for example, make it possible to respect the commitment, for the moment not credible, made by the government in the 2022 finance law to amortize the debt due to the Covid-19 crisis over twenty years (“ Economic expertise and public policy: critical examination of the proposals on debt linked to the pandemic », Political economics notoh 93, February 2022). However, public spending will naturally increase over the next three decades, which should be marked by extreme events, according to the latest report from the Intergovernmental Panel on Climate Change. In addition to the State as insurer (partial unemployment) and protector (vaccine, tests), the anticipatory State must also finance public expenditure on education and research to ensure the necessary bifurcation of the growth regime towards a carbon-neutral regime. .
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