A notary sign on a facade, in 2019 (AFP / Archives / Pascal GUYOT)
The idea of a reform of the inheritance tax, a tax hated by the French but a source of worsening wealth inequalities, is coming back into the debate in favor of several economic studies, while the subject clearly divides the candidates for the presidential election.
A note from the Economic Analysis Council (CAE), the body responsible for advising the government, made a new contribution on Tuesday on this highly sensitive subject.
Noting, with supporting figures, that inheritance is “making a comeback” and that the current tax system reinforces inequalities in wealth and opportunities, this document recommends “in-depth” reform.
Today, “it becomes essential to have inherited to have access to the highest standard of living”, indicates the economist Camille Landais, one of the authors of the note.
Currently in France, inheritance is taxed on the death of a person, his heirs being taxed at a progressive rate depending on the amount of inheritance transmitted. But many allowances and exemptions make it possible, especially for the better-off, to reduce the amounts paid.
In total, “40% of the inheritance transmitted escapes the inheritance flow” apprehended by the tax administration, underline the authors of the note, who propose to reduce or eliminate the exemptions and to tax the inheritances either at the time of the death of a person, but on all the sums or goods received by an individual throughout his life.
This system, in place in Ireland, has already been defended recently by the OECD and last June by the report by economists Olivier Blanchard and Jean Tirole commissioned by Emmanuel Macron on the economic challenges of the post-crisis period.
These measures aim to make the inheritance tax more progressive, by increasing the sums paid on the most important estates.
An increase also deemed beneficial by the International Monetary Fund (IMF) last April, in a context of deterioration of public finances of States with the health crisis.
– Clear political divisions –
The question of a reform of the inheritance tax comes up regularly in the public debate. Raised by some members of the majority in 2018, it had been evacuated by Emmanuel Macron: “Stop pissing off retirees”, he had launched to collaborators, adding that “we do not touch it” so much that he would be at the Elysee Palace.
President Emmanuel Macron in the courtyard of the Elysée Palace, December 20, 2021 (AFP / Ludovic MARIN)
The subject is sensitive: this tax is one of the most hated by the French, recalls the CAE, often by ignorance of its operation, and even though it could further reduce inequalities.
“We are very aware of the fact that it is a complicated debate. But we want to put elements of rationality in this debate”, defends Philippe Martin, president delegate of the CAE.
This theme is in any case at the heart of the proposals of most presidential candidates, even if all have not yet detailed their program. And with clear cleavages.
On the right and on the far right, we are instead defending tax relief on donations. A parent can currently donate 100,000 euros without paying tax to their children, and this every 15 years.
The Republican presidential candidate, Valérie Pécresse, on December 11, 2021 in Paris (AFP / Archives / BERTRAND GUAY)
During the Republican primary, Valérie Pécresse defended the idea of a “shock of heritage transmission”, with donations of 100,000 euros now tax-exempt “every six years”.
For her part, Marine Le Pen wants to reduce the time between two donations to 10 years and extend them to grandparents. It also proposes to exempt real estate property from inheritance tax up to 300,000 euros “to promote rooting and transmission”. Eric Zemmour wants to remove inheritance tax on transfers of family businesses.
On the left, it is the opposite movement and the proposals aim to impose more successions and donations.
The rebellious presidential candidate, Jean-Luc Mélenchon, during a speech in Martinique, December 18, 2021 (AFP / Archives / Christophe ARCHAMBAULT)
Jean-Luc Mélenchon wants in particular to create a maximum inheritance for the greatest fortunes.
Anne Hidalgo has not yet unveiled a precise proposal, but a bill signed by many Socialist deputies, rejected by the majority, defended a reform sharing the CAE’s proposal on the taking into account of all the sums received by an individual throughout his life, by adding a deduction for all of 300,000 euros.
© 2021 AFP
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