Book. The terms of the debate on public spending in France have been the same for fifty years since Parliament has been voting deficit budgets. On the one hand, an excessively spendthrift state; on the other hand, businesses held back by the incessant rise in levies. Supported by figures, the economist Anne-Laure Delatte, professor at Paris-Dauphine PSL University, dismantles these clichés with a few observations in The right state in the wall.
Yes, the State has continued to take an increasingly large share of the national wealth: a third of the gross domestic product (GDP) in the 1960s, more than 40% in the 1970s and 1980s, nearly 45% in the 1990s, 46.7% in 2021. No, it is not companies, but households, which bear most of this burden. To demonstrate this, the author does not focus on the official tax and contribution rates, but on the sums actually received by the tax authorities and Social Security, because this makes it possible to take into account the countless exemptions, niches and reductions enjoyed by taxpayers. And, above all, companies…
The result of this long and tedious dive into statistics: in 1949, taxes weighing on households represented 15% of GDP, those levied on businesses, 4.7%; in 2021, these figures are 23.8% and 5.9% respectively: it is therefore of course on households, and first of all the most modest ones, that the tax increase has weighed the most. For what ? Because it is taxes on consumption (value added tax in particular) and on labor (generalized social contribution and contribution to repaying the social debt) that have progressed the most, while the multiplication of niches has slowed down the increase in taxes on companies and the wealth of the wealthiest.
However, it will be objected, the bulk of levies on companies does not come from taxes but from social security contributions. They weigh twice as much on businesses as on households, and twice as much as their taxes. But, if this weight fell from 5.4% to 9.9% of GDP between 1949 and 1984, it then, unlike other levies, decreased from 9.9% to 8% between 1985 and 2021, in the name, specifically, the reduction of costs and the competitiveness of companies.
Question asked again
None of this would be very serious if, on the expenditure side, households and businesses shared the public manna in proportion to their contribution. This is not the case, says Anne-Laure Delatte, again with supporting figures. If we stick to direct subsidies alone, those paid to households fluctuate, depending on the period, from 1.6% to 2.3% of GDP, and remain around 2.3% for companies. But the author adds to this the tax loopholes, including those which are said to be “downgraded” (which have become permanent exemptions), which she equates to expenses – as the national accounts do, moreover -, since they are acts for the State of a shortfall. The share of companies in public spending then goes from 9.7% of GDP on average since 1979 to 13% in 2021, while aid to households, including niches (which first benefit the wealthiest among them) , remained stable.
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