What's behind the new wealth tax currently being developed?
As the issue of funding the green transition sparks heated debate, two members of parliament are proposing to finance it through a one-time European-level tax on the wealth of the richest taxpayers.
In a report on wealth taxation, Jean-Paul Mattei, leader of the MoDem deputies and a key figure in the presidential camp in the National Assembly, and Nicolas Sansu, a Communist deputy, warn of “wealth inequality” that has been “on the rise for more than 20 years.” “92% of total gross wealth is held by the wealthiest half of households,” and “the average inheritance of the top 0.1% of heirs” is “approximately 180 times the median inheritance,” the lawmakers write. This observation “directly calls into question our social contract,” says Nicolas Sansu. It prompts us “to reexamine the current framework for wealth taxation,” particularly in light of the challenge of climate change, emphasizes Jean-Paul Mattei.
The two elected officials are proposing “exceptional and explicitly temporary levies” on the wealthiest individuals at the European level. “A 5% levy spread over 30 years, based on the net financial assets of the top 10% of wealthiest individuals, would generate 150 billion euros,” the members of Parliament write.
The two lawmakers also recommend revising the tax deductions on real estate capital gains by overhauling a system that provides exemptions after 22 and 30 years of property ownership—a system they believe can lead to speculation and hoarding in a sector in crisis. They recommend indexing the threshold for the real estate wealth tax (IFI) to inflation; the tax is currently levied on net assets exceeding 1.3 million euros (i.e., after deducting outstanding loans). They also recommend “capping the 30% exemption on the primary residence” that taxpayers receive under the IFI.
The report also proposes curbing certain tax avoidance schemes for financial income involving wealth-holding companies, raising taxes on life insurance transfers, and implementing a “moderate increase” of three percentage points in the flat tax—a single, flat-rate levy on capital gains.
Members of Parliament will present their report to the Finance Committee on Tuesday, between Emmanuel Macron’s announcements on Monday regarding ecological planning and the submission of the draft state budget to the Council of Ministers on Wednesday.
