Delivered. Contributions to the presidential election could have served as a powerful media springboard. What could be more judicious than a major public debate on the question of heritage and inheritance in France to respond to the concerns of a large part of the population about purchasing power and the end of the month? For public opinion, the rise in inequalities in France, for at least three decades, is both obvious and a scandal. But both words deserve attention, as demonstrated by the two economists Alain Trannoy and Etienne Wasmer, in their invigorating essay.
On the one hand, France is rich, even very rich, in particular thanks to the value of its real estate heritage which today amounts to 7,000 billion euros in France, which corresponds to nearly three times GDP. This reinforces the shocking aspect. But, on the other hand, inequalities have remained to a large extent contained in France, unlike in the United States, by the game of compulsory levies. This reflects the strength of the French redistributive apparatus.
“The exclusive prism of inequalities distorts reality”, note the two authors. For example, at the global level, their progress is largely explained by the increase in inequalities in the four most populous countries on the planet: China, India, the United States and Indonesia. However, at the hexagonal level, despite a relatively less significant increase in inequalities, their perception is reinforced and results in an exacerbation of social tensions and the designation of the rich as scapegoats.
Tipping of 60 billion euros
The path followed by Alain Trannoy and Etienne Wasmer is quite different. Starting from the principle that we redistribute all the better as wealth is abundant, their urgency is to “find a way to reduce taxation on productive factors and in particular wages and investments”. Under these conditions, mobilizing the share of real estate and land wealth and more specifically land excluding buildings and infrastructure – which represents another three years of national income – could prove to be the most effective choice.
For the two former members of the Economic Analysis Council attached to the Prime Minister, ground rent represents an ideal tax base for carrying out a reform of state finances. While the 60 billion euros in tax increases, decided under the five-year terms of Nicolas Sarkozy and François Hollande, have put the French economy “in stagnant mode”, Messrs. Trannoy and Wasmer have a “flagship proposal” : cut taxes on labor and capital by 60 billion euros, by means of a scale of the same amount on the land base. “It is not a question of increasing taxes, but of changing the tax base for the amount mentioned”, they point out. This proposal, which would combine social justice and economic efficiency, even garners the favor of Jean Tirole, the French Nobel Prize winner in economics.
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