France Debates Wealth Tax, Other Reforms, G20 Meets in Paris

France Debates Wealth Tax, Other Reforms, G20 Meets in Paris

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This past weekend the Finance Ministers of the G20 gathered in Paris at Bercy to discuss financial regulation, commodities, reform and economic recovery measures. You can read a summary of the main issues here, thanks to the Telegraph. You can read more here, in French, as well.

While on the global stage France is aiming at financial reform, at home they are debating about taxes and domestic reforms of their own. The Impôt de solidarité sur la fortune (ISF), or the Solidarity tax on wealth, is a tax on those in France  (individuals and couples) whose assets are worth more than 800,000€.

This tax applied to 562,000 households in 2010, bringing in 3.29€ billion to the government. The brackets are below, with relatively light rates. However, there is talk of reform so as to exclude some French who own property that increased in price due to real estate values.

Debate centers around the minimum threshold to start taxing, with some favoring 1.3€ million (like French Budget Minister François Baroin). This would result in 300,000 French being excluded from the tax and 900€ million less in tax revenue for the government. How to compensate this loss?

The other subject fueling debate and resentment by many is the bouclier fiscal, or the tax cap, whose elimination would bring in an extra 700 to 900€ million in tax revenue. This measure currently limits total taxes to 50% of assets.

The subject is set to be a key issue leading up to the 2012 elections. Even though it’s divisive and President Sarkozy says he is committed to real reform, true reform (and thus risk-taking) might be less likely because of the desire of politicians to “play it safe” in election years. We’ll have to see how this one plays out.

You can learn more in French from Les Echos (similar to WSJ), which has a special report on French fiscal reformLa Tribune, another business newspaper, also has an in-focus look.

Less than

€800,000

0 %

From

€800,000 – 1.31 million

0.55 %

From

€1.31 – 2.57 million

0.75 %

From

€2.57 – 4.04 million

1.00 %

From

€4.04 – 7.71 million

1.30 %

From

€7.71 – 16.79 million

1.65 %

Over

€16.79 million

1.80 %

Michael Barrett is a communications consultant, freelance translator and English teacher. He writes a must-read blog for expats called American Expat In France.

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