Footnotes (43)



The Economic Consequences of the French Wealth Tax

Eric Pichet

KEDGE Business School

September 15, 2008

La Revue de Droit Fiscal, Vol. 14, p. 5, April 2007

Despite attempts to 'unwind' the Impôt de Solidarité sur la Fortune ('Solidarity Wealth Tax,' the French wealth tax) during the last legislature (2002-2007), ISF yields had soared by 2006, jumping from €2.5 billion in 2002 to €3.6 billion. Analysis of the economic consequences of this ISF wealth tax has raised the following conclusions: Tax collection costs remain low (around 1.6% of proceeds); Not raising the threshold in line with inflation between 1998 and 2004 created windfall revenues for the French State of €400 million in FY 2004 alone; ISF fraud mainly involving an under-assessment of property assets has stabilised over time at around 28% of total revenues, equivalent; (had the legal framework remained unchanged) to a shortfall for the State of €700 million in 2004; Capital flight since the ISF wealth tax’s creation in 1988 amounts to ca. €200 billion; The ISF causes an annual fiscal shortfall of €7 billion, or about twice what it yields; The ISF wealth tax has probably reduced GDP growth by 0.2% per annum, or around 3.5 billion (roughly the same as it yields); In an open world, the ISF wealth tax impoverishes France, shifting the tax burden from wealthy taxpayers leaving the country onto other taxpayers.

Number of Pages in PDF File: 25

Keywords: Wealth tax, Economic consequences of taxation, French taxation, tax competitiveness, fiscal flight

JEL Classification: H22

Open PDF in Browser Download This Paper

Date posted: August 16, 2009 ; Last revised: June 17, 2011

Suggested Citation

Pichet, Eric, The Economic Consequences of the French Wealth Tax (September 15, 2008). La Revue de Droit Fiscal, Vol. 14, p. 5, April 2007. Available at SSRN: https://ssrn.com/abstract=1268381

Contact Information

Eric Pichet (Contact Author)
KEDGE Business School ( email )
Domaine de Luminy - BP 921
BP 921
Marseille, PACA 13288
Feedback to SSRN

Paper statistics
Abstract Views: 3,756
Downloads: 606
Download Rank: 33,329
Footnotes:  43