Analysis Reveals Inconsistencies in France's High Income Tax Policy
IPP critiques France's high income tax policy, predicting lower revenue than expected.
Key Points
- • IPP questions efficacy of the CDHR high income tax policy.
- • Government expected €2 billion revenue, IPP predicts only €1.2 billion.
- • CDHR was negotiated by the Socialist Party for fiscal equity.
- • IPP report also reviews broader budgetary context, influencing future debates.
A recent report from the Institut des politiques publiques (IPP) has cast doubt on the effectiveness of the contribution différentielle sur les hauts revenus (CDHR), a high income tax policy implemented by the French government. The CDHR, which was designed as a temporary measure to levy at least 20% on the taxable income of the wealthiest citizens, was expected to generate €2 billion in revenue. However, the IPP forecasts that actual revenues will likely only reach €1.2 billion, raising concerns over the policy's anticipated fiscal impact.
The CDHR was negotiated by the Socialist Party during the budget discussions, aiming to promote fiscal equity. Yet, the significant discrepancy between expected and projected revenues suggests that the measure may not be as effective as intended. The IPP's report, titled "Perspectives budgétaires - Juin 2025", also touches on broader budgetary issues, including public employee pensions and demographic challenges that could influence future fiscal policy discussions.
As the government prepares for the budget debates of 2026, these findings could play a crucial role in shaping conversations about taxation and public spending in France. In a context where the efficiency of fiscal policies is under scrutiny, the IPP’s insights may prompt a reevaluation of the CDHR amidst ongoing budgetary pressures.