Retirement

Direct household taxes gone sky-high : + 22% increase between 2010 and 2017

N°198 • l'équipe de la Fondation iFRAPl'équipe de la Fondation iFRAP

couverture

In 2017, we collectively paid 1,038 billion in taxes including 250 billion euros of direct taxation on households. In the same year, Emmanuel Macron promised to lower the tax burden from 44.5% to 43.6% of GDP at the end of 2022 with a net decrease of 20 billion euros, including 10 billion euros of tax relief for households. These objectives will not be achieved because the Government now plans a tax rate of 45% in 2022. Even so, the French bear the highest tax burden in Europe. A painful reminder: the average of compulsory contributions in the Euro area is 40.4%, which is 4 points less than what we currently have.

Where does the problem come from? If the presidential promises in terms of tax cuts are well and truly in place (lower employee contributions and exemption from housing tax), we can see that each of these cuts is financed... by a new tax increase: increase in supplementary social security contributions (CSG), tax on tobacco and even a new tax on geothermal deposits, without forgetting the planned increase in green taxation and carbon tax. The latter increase was cancelled as a result of the demands of the first “gilets jaunes” or “yellow vests” movement.

Households are exasperated with the tax system: between 2010 and 2017, direct taxes on households increased by more than 60 billion euros, of which 27 billion euros were borne by the rise in income tax and 16 billion by the increase in supplementary social security contributions (CSG). However, not all households contribute at the same level as only 43% of them are taxable and households earning more than 4,623 euros per month bear 52% of income tax collection.

The squeeze is for real: if this trend continues, a growing number of French people may well be tempted by tax exile.

As part of the Great Debate, the iFRAP Foundation wanted to re-establish accountability on household contribution to the tax burden. What we can see is that the distribution of this burden is borne by an increasingly concentrated fraction of French people, even if all households pay direct taxes thanks to social security contributions (CSG), income is already taxed along a progressively increasing scale and there is no hidden jackpot or wealth to support this.

The actual tax situation of households is:

  • In 2017, direct taxes on households amounted to 250 billion euros, up 63 billion in seven years (2010 to 2017), including a 27-billion increase uniquely for income tax.
  • While the top 10% of affluent households account for 35% of income, they pay 52% of direct household taxes, i.e. 130 billion euros. And they have borne 38% of the direct tax supplement in seven years (24 of 63 billion euros).
  • The 40% of middle-income households account for 47% of income and pay 40% of direct household taxes, amounting to 100 billion euros.
  • While the bottom 50% of poorest households accounting for 18% of income, pay 8% of direct household taxes, amounting to 19.8 billion euros.