Proposed tax rises on well-off in france: who is deemed wealthy?

THE PM IS CONSIDERING SEVERAL OPTIONS TO RAISE THE BILLIONS NEEDED TO ADDRESS THE COUNTRY’S DEFICIT New Prime Minister Michel Barnier has confirmed that he intends to raise taxes for the

wealthiest people in France, with several scenarios currently being considered. Mr Barner made the announcement in his speech to the Assemblée Nationale on October 1, adding that “fixing the

public’s finances would not be painless”. ‘SWORD OF DAMOCLES’ He called the country’s debt of €3,228 billion, and public deficit of 6%, “a real sword of Damocles”, and pledged to reduce the

deficit to 5% in 2025, largely through spending cuts. Spending cuts will account for a saving of €40 billion of the €60 billion needed, he said. Yet, he said that the effort would need to

be “shared”, particularly by “large and very large companies that make substantial profits”, and by “the wealthiest French people’, who will help find the other €20 billion in cuts, he said.

Mr Barnier has already said that he will “not touch” taxes for the middle classes and average earners. The PM is set to hold a meeting with MPs on October 9. This is also the date on which

the new budget for 2025 will be presented, in which he is expected to finalise details on the new taxation plans. Some possible options for increasing taxation include: * Freezing the upper

brackets of the income tax scale, which would increase income tax payable by the richest tax households * Creating a ‘tax net’ to introduce a minimum income tax of 25%, which would work to

eliminate tax exemption practices (which currently mean that some wealthy people manage to avoid paying an element of tax) * Significantly increasing the exceptional contribution on high

incomes (contribution exceptionnelle sur les hauts revenus, CEHR). WHAT IS THE CEHR AND WHO PAYS IT?  Since 2012, the CEHR contribution has been added to income tax for the richest payers. 

It amounts to: * 3% for single people whose taxable income exceeds €250,000, or €500,000 for a married or civil union couple. * 4% for income over €500,000 (€1 million for a couple). The

CEHR brings in around €1.5 billion for the state. The rates could be tripled as part of the 2025 budget. ‘TAX ALREADY HIGH’ Yet, experts suggest that this looks unlikely.  If the rate were

tripled to a maximum of 12% - compared with 4% today - “the tax rate could reach 74.2% for property income, for example, comprising 45% income tax, 12% CEHR and 17.2% social security

contributions”, said tax lawyer Patricia Jolicard to Capital. This is 8% more than the current rate of 66.2%, which is already high, said Lukasz Stankiewicz, Director of the Centre

d'études et de recherches financières et fiscales at the Université Jean Moulin Lyon 3. He cited the 2013 Conseil d’Etat recommendation that the cumulative marginal taxation of income

should not exceed 66.66%.