The real estate wealth tax is a tax as concentrated as its predecessor, the ISF. The evaluation committee is due at the end of September to make its first conclusions on the impact of the reform.
One year after the first collection of the real estate wealth tax (IFI), the data concerning the replacement of the ISF began to be disseminated. In his report on the application of tax measures, the deputy Joël Giraud (LREM) publishes an X-ray of those subject to the IFI which qualifies certain received ideas conveyed during parliamentary debates. What was already known is that the real estate wealth tax was paid by 132,722 taxpayers in 2018, against 358,000 for the last vintage of the ISF.
Receipts, of 1.3 billion euros, were higher than expectations, insofar as Bercy had made cautious forecasts for lack of data on the real estate assets of the great fortunes. From now on, we have a better view of the volume of assets that have been exempted as a result of the reform of the ISF. The total net taxable assets fell from 1.028 billion euros, before reform, to 300 billion euros once only real estate assets were taxed.
Average income of 234,000 euros
More surprisingly, IFI taxpayers earn on average better than those who paid the ISF, whereas in parliamentary debates the right warned of the risk of taxing the “small rich” rather than the ” big rich ”. For the IFI, the reference tax revenue is on average around 234,000 euros per year, compared to 165,000 euros in the last year of the ISF.
IFI, the new Macron version of ISF
It would undoubtedly require more detailed data to analyze this figure, but the distribution by wealth deciles shows an equivalent concentration for the two taxes. The wealthiest 10% of IFI taxable persons, whose taxable assets exceed 3.6 million euros, represent 45% of revenue. For the ISF, it was 48%, and their assets exceeded 4.3 million euros. On the other hand, the “small rich”, whose taxable heritage is less than 1.6 million euros pay less than 7% of these IFI revenues, which may have a logic for a tax whose scale is progressive.
Reduced cap cost
By reforming the ISF, the State made an economy that went unnoticed by the general public. The cap on wealth tax, which cost up to 1.3 billion euros, is now only 91 million euros with the refocusing on real estate assets. This mechanism allows taxpayers to limit their total tax to 75% of their income. Its use is much less frequent with IFI.
Finally, this report gives a first indication of the effect of the reform on donations to associations. The tax loophole has been maintained, but it now concerns fewer taxpayers who pay lower taxes. In 2018, 19,861 households declared donations under the IFI, a decrease of 60%. The total amount fell 50% to 137 million euros.
The drop is much more brutal for investments in SMEs, where the tax reduction has gone from 550 million to 160 million euros. In return, will the refocusing of the ISF on real estate have more encouraged large fortunes to invest in shares? It will be up to the capital tax reform evaluation committee to provide answers. Appointed in the wake of the “yellow vests” movement, this committee of economists, elected officials and researchers plans to publish a first report at the end of September.