A comparative analysis of wealth tax systems in various countries, focusing on their effectiveness and yield.
Extract
[...] The issues arise with regard to the valuation of housing. For example, Norway retains only a quarter of the estimated value and Switzerland commonly uses bases below market value.36 In France, the IFI concentrates the same difficulty since different references coexist, such as market values for the tax base or cadastral values for property taxes. Financial assets are not exempt from difficulties. Listed shares lend themselves to simple rules, such as the last price or an average over a given period. [...]
[...] For this reason, the debates on the IFI mechanism have been very rich. For example, debates have been held on the indexing of the threshold, on the capping of the deduction on the main residence or on the improvement of the declarative tools.17 Furthermore, the report mentions that a return to a tax on financial wealth is foreseen by certain experts.18 This variety shows that the IFI transcends its simple budgetary function. It is a point of friction concerning fiscal justice and the sharing of charges. [...]
[...] The OECD summarizes it by stating that 'base and parameter choices largely determine the effectiveness of the tax'. §2. The persistent limitations of these devices A. The difficulties of evaluation and the risks of optimization The first difficulty lies in the very nature of the tax base. Valuation 'at market value' is easy to state in principle, but tricky to apply as soon as one moves away from listed financial assets.35 This is one of the reasons that led France, with the IFI, to exclude financial assets entirely, supposed to be more difficult to value, by focusing on real estate. [...]
[...] 43 The comparison with the IFI highlights a ambivalence specific to France. The absence of regional autonomy limits territorial disparities and ensures a certain clarity. However, the perception of justice does not only depend on this uniformity, it also depends on the political narrative in which the tax is inscribed and the clarity of the rules applied. In this context, the IFI suffers from a double handicap. Its narrow tax base reinforces the idea of a tax that is above all symbolic and its modest yield weakens the redistributive function it should perform. [...]
[...] An economically ineffective tool A. A limited impact on real estate and productive investment The assessment of the IFI as an economic tool requires examining its real effects on the allocation of savings, real estate investment, and entrepreneurial dynamics. In reality, no significant reorientation of the heritage in favor of real estate has been observed, at this stage, among households affected by the 2018 reforms. Specifically, between 2014 and 2020, no movement indicating the abandonment of real estate investments in favor of financial capital has been observed. [...]
