Charles Beigbeder is an entrepreneur and president of the Pont-Neuf Foundation.
In its latest publication, the Economic Analysis Council (CAE) proposes that the government fight against inequalities by taxing inheritances more heavily.
This note highlights the ideology which, in France, has gradually transformed the taxation of inheritance into a tool of repression, economically inefficient and socially unjustifiable.
The analysis of the CAE is based on a simple observation:
"The return of the heritage, for thirty years, carries with it the risk of a profound disruption of equal opportunities, a cardinal value of democratic societies"
. This diagnosis covers two related but distinct phenomena: on the one hand, the growing weight of inherited wealth and, on the other hand, the very high concentration of wealth. Before wondering about the concrete consequences of such inequality, it is surprising that we do not first seek to explain it. However, this state of affairs stems from easily identifiable phenomena.
If the relative weight of family assets in relation to national income doubled between 1970 and 2020, it is primarily because financial and real estate assets have benefited in recent years from exceptionally favorable conditions: historic decline in inflation, liquid injected en masse into the markets by the central banks, interest rates close to zero. This is also due to the fact that globalization has put an end to the continuous rise in wages that France had experienced during the post-war boom period. Finally, if assets are held by an increasingly limited number of individuals, this can be seen as a direct consequence of the decline in the birth rate, the same assets being transmitted to a smaller number of descendants.
The economists of the CAE are committing a serious error of analysis here, by confusing equal opportunities with equal standards of living.
Charles Beigbeder
The authors of the CAE note prefer to insist on social inequalities, recalling that
"the top 1% of heirs can now obtain, by simply living as an annuitant, a standard of living higher than that obtained by the top 1% of workers"
. It is regrettable that recognized researchers propagate clichés straight out of a Zola novel: nowadays, those who could live on their rents rather found start-ups or private equity companies. But there is something more serious: the economists of the CAE are committing a serious error of analysis here, by confusing equal opportunities with equal standards of living. However, true equality of opportunity is that which allows everyone, whatever their social level, to give the full measure of their talents: it is therefore through income, much more than through assets, that one can legitimately measure it.
Under the guise of scientific objectivity, the CAE actually seeks to promote partisan positions.
This is manifested first of all by the desire to erase one of the major characteristics of our tax system: the priority recognized for the transmission from parents to children (which represents more than 90% of the capital transmitted and less than 50% of the rights transfer free of charge).
Is it in the name of economic efficiency?
Not at all.
It is to take account of
“profound changes in family structures”
that it is recommended to align the two regimes, obviously by reducing the advantages offered by the more favorable of the two.
Read alsoA body responsible for advising the government proposes to “rethink” inheritance tax
In addition to a call to tax life insurance more heavily (which every government dreams of without daring to undertake it), the CAE proposes to abolish the tax advantages linked to the
"sequencing of heritage transmissions"
, that is to say transfers of assets spread over time, even though the lengthening of life expectancy makes this form of solidarity between generations essential.
A second proposal is for the gradual abolition of tax exemptions granted to professional assets.
These, thanks to the “Dutreil Pact”, are more generous in France than elsewhere.
It would therefore be a question of aligning with Germany where, since 2016, exemptions of this type have been limited for professional assets ranging from 26 to 90 million euros, while beyond this threshold, common law applies.
The last proposal of the CAE must on the other hand be fought without reserve: it would be a question of paying to each citizen reached the majority a fixed capital.
Charles Beigbeder
Although debatable, these avenues of reform can still be discussed. The last proposal of the CAE must on the other hand be fought without reserve: it would be a question of paying to each citizen reached the majority a fixed capital. This measure is not only the purest demagoguery; it is based, there again, on a culpable error of analysis. Indeed, this device already exists: it is education expenditure. According to INSEE figures for 2019, they represent €9,000 per year and per student (83% funded by the community). This means that a capital of €88,000 is allocated to every young Frenchman during his 13 years of compulsory education: this is the essential factor of social mobility and the richest inheritance that an individual can receive. Alas,all international rankings indicate that the training financed by these expenditures is increasingly poor. If we want to enrich all the French people, it is enough to ensure that this endowment is no longer squandered by an inefficient and excessively politicized administration. In terms of inheritance, one of the most urgent reforms is therefore that of National Education.
Rather than pandering to the hatred of the rich that serves as an economic agenda on the far left, it would be better for the country as a whole to stimulate both innovation and the will to transmit.
Charles Beigbeder
This does not mean, however, that our inheritance tax regime should remain unchanged. However, rather than pandering to the hatred of the wealthy that serves as an economic agenda on the far left, it would be better for the country as a whole to stimulate both innovation and the will to transmit. Far from increasing existing taxation, one could thus imagine abolishing all gift and inheritance rights for the transmission of family businesses. We will be objected that this will further benefit the wealthiest 1%. there is no doubt. However, nothing prevents us from designing legislation which, renouncing repression, encourages productive investment rather than the squandering of wealth in consumption. We will surely add thatsuch a relaxation would strain our budgetary resources. That's right. But are there not enough savings to be made on our 1,420 billion euros of annual public expenditure to finance such an emblematic measure of the support that the State should provide to French companies?
