TRIBUNE - While a beginning of tax dispute is rising in France, Bernard Monassier * and Frédéric Douet * propose to the President of the Republic a real tax revolution by the establishment of a flat-tax at three constant rates.
A tax dispute is being established in France. Retirees first see their pensions decrease as a result of CSG increase. Tomorrow, landowners will find that their income will also decrease for the same reason. Finally, in a third time, it will be the turn of the employees.
Such a challenge is dangerous for the Republic. The French are lovers of jacqueries that have sometimes led to real revolutions. The President of the Republic has the historic opportunity to make a tax revolution to anticipate this revolt.
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To do this, the income tax should be eliminated and effectively integrated into the CSG. The merger of the IR, CSG and CRDS would give rise to the generalized tax contribution (CFG). It would be a flat-tax at three constant rates from the first euro with a haircut system to avoid the effects of threshold: 0% for income below 1900 € per month, 12% for income between 1900 and 5000 € per month and 25 or 30% for income over 5000 € per month.
First, the CFG would evade any levy on their income the twenty-two million French with a gross monthly income less than 1900 €. Eighteen million taxpayers would be affected by the 12% and five million by the 25 or 30%. The annual cost of the exemption of twenty-two million taxpayers would be 4 billion euros. But the CFG would restore purchasing power to all French, thereby boosting consumption and, ultimately, revenues in terms of VAT and profit tax.
Then, the CFG would allow the removal of all tax loopholes. Their cost is estimated at 33.6 billion euros for 2018, including 12.7 billion for credits and tax cuts. On the other hand, their effectiveness is debatable. The legislator has pushed schizophrenia to restore the purchasing power to taxpayers in the form of credits and tax cuts and, at the same time, to cap at 10,000 € per year the total tax benefit provided by most tax loopholes. Their removal would make our tax system more readable and the government savings would make the CFG's revenues close to those of the IR and the CSG.
Reconcile the French with the tax
Finally, to base the CFG on gross income and to eliminate tax loopholes would limit the risks of fraud and evasion while allowing a real withholding tax, including for property income, and not such as that. is currently planned, which turns out to be ultimately a mandatory monthly payment for all of the IR. Less controls, more fluid recipes, such would be the solution of this widespread flat-tax. This is the only way to reconcile the French with the tax; paradoxical situation since they contest the income tax while more than 50% of them do not pay it.
* Frédéric DOUET is a professor at Rouen-Normandie University.
* Bernard MONASSIER is president of BM Family Office and vice-president of the Circle of tax experts. He is a director of Dassault Médias.
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Source: © "What if we removed the income tax?"