This book deserves the attention of elected officials and election candidates, as well as that of all taxpayers. It traces the history of the taxes, duties and contributions that increasingly affect the French population. While presented as a textbook on comparative taxation, it encompasses an in-depth examination of the theoretical foundations, the triggering events, the positive and negative externalities, and, above all, the possible avenues for reform of the French socio-tax system. The book is structured into five chapters covering taxes on expenditure (VAT), personal income, corporations, inheritance and property wealth. The book is rounded off by two chapters on the full cost of public funds and on the ‘Laffer effect’. The evolution of the CSG (contribution sociale généralisée – general social contribution) illustrates the entire history of French taxation: a contribution that initially had a broad base and a reduced rate has, for electoral reasons, become a complex tax with numerous exemptions.
The author analyses the causes of the inefficiency of public services, demonstrating that demand for most public services has more negative effects than demand for equivalent private services, since, in a market, everyone must pay the price of what they consume. He identifies the inactivity traps created by certain taxes. He deconstructs certain claims advanced by the ‘egalitarian economists’, who developed the numerous theories underpinning France’s socio-tax systems. He distinguishes between economic taxes and ideological (or ‘clientelist’) taxes, and observes that the latter are increasingly dominating the former. His analysis of the Laffer curve is original. In principle, the curve, or the theorem, makes it possible to determine the rate at which taxation becomes inefficient, as it is perceived as excessive by the taxpayer and leads to deviant behavior. The author observes that the effects of over-taxation are unpredictable due to the differences between countries in the elasticity of income and/or profits in relation to taxation.
The author concludes by arguing that the taxation of the future must be fair and efficient. To achieve this, it is necessary to shift the tax burden as far as possible onto consumption, to introduce a proportional rate of income tax, to set corporate tax at 15%, and to abolish inheritance tax and property wealth tax. Priority should be given to broad-based, low-rate taxes. Taxation must not hinder the functioning of markets, which generate productive jobs and create value. Every citizen must take responsibility for themselves. Taxation is not intended to be redistributive. To achieve this objective, the tax structure must be fundamentally reformed.
The main economic handicaps are of fiscal origin. If the French do not abandon their utopian egalitarian ideal, France will come under the control of other nations and the financial markets.
François Facchini is professeur in économics at Paris I Panthéon Sorbonne University.
Jean-Jacques Pluchart