Slayer of the ISF in 2018, for the benefit of the IFI, Emmanuel Macron has not shown a desire to reconsider his choice. His opponent in the second round of the presidential election, Marine Le Pen, wants to give new life to the wealth tax, but in a lighter version.
This is one of the major tax reforms of the five-year period that is coming to an end, and no doubt also one of the most controversial. As soon as he came to power in 2017, Emmanuel Macron signed the death sentence of the Wealth Solidarity Tax (ISF), to be replaced by a real estate wealth tax (IFI), with a much narrower base. It applies, in fact, to wealthy households whose net taxable value of real estate assets exceeds 1.3 million euros, after deduction of debts and a reduction of 30% on the value of the principal residence. But it excludes financial assets (stocks, bonds, etc.), as well as certain professional assets.
A choice justified at the time by the need to direct investments towards the productive sector, and especially in SMEs and family ETIs, promised Emmanuel Macron at the time, rather than towards real estate. However, the President of the Republic did not see fit to impose compensation on the households affected by the reform. A way also to curb the supposed exodus of French fortunes to countries with more conciliatory taxation. Hence this image of gift to the rich.
Four years later, this strategy has had little measurable effect, estimated last October a report by France Stratgie, an organization responsible for advising the government.
Taxes: Was Macron right to abolish the ISF?
Marine Le Pen promises an IFF
This probably explains why the return of the ISF was on the rise among the candidates in the first round of the presidential election, which delivered its verdict last Sunday. Nine candidates promised, in fact, the return of a broad taxation of the heritage of large fortunes. Among them, all the candidates marked left, but also Marine Le Pen.
In her 1st round program, the candidate of the Rassemblement National (RN), qualified with just over 23% of the votes cast, announced the establishment of a financial wealth tax (IFF). The scale used would be similar to that of the old ISF, in force until 2017. At the time, the system concerned assets whose net taxable value exceeded 1.3million euros. The households concerned were then taxed from 800,000 euros, at a rate increasing by 0.5%, between 800,000 euros and 1.3 million euros, 1.5% beyond 10 million euros.
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The chosen perimeter, on the other hand, would be different. Marine Le Pen shows, in fact, her intention to exclude principal or sole residence. This second scenario concerns households that own a property that they do not live in permanently and that are also tenants of their main residence. Goods purchased with a view to earning rent would be included in the IFF.
Other assets could escape it: professional goods, firstly, in particular agricultural goods, as well as works of art held for more than 10 years and monuments classified or registered as Historic Monuments, explained last December the candidate of far-right in Parisian.
Emmanuel Macron, status quo… for now?
Also qualified for the second round with nearly 28% of the votes cast last Sunday, Emmanuel Macron has not shown any desire to make changes to his IFI. The Liberal candidate, however, hinted that he could make changes to his program between the two rounds, in particular to facilitate the transfer to his name of readers marked on the left. Will the ISF be part of it? In the immediate future, the outgoing president has only opened the door to an adjustment of his plan to raise the legal age of retirement to 65 years. Case to follow.