© PIXABAY
– Freezing such a scale would have the mechanical effect, with inflation, of increasing the amount of tax.
French public finances are going bad. This is the first task of the new Prime Minister, Michel Barnier: finding where to make savings or, conversely, finding new sources of income in state coffers. One of the options put on the table for several weeks obviously lies in increasing taxes. But the government is cautious about the increase in taxes for the middle classes and the head of government wanted to be reassuring on the France 2 set.
He then said he did not want “further increase taxes on all French people who already pay the most taxes of all European partners. Thus, he promised, no increase on people of modest means, who work, or on the middle class. But is this completely true? In fact, behind the scenes, the government is considering freezing the income tax scale. This scale is fixed each year and is reevaluatedeach year, notably according to inflation. It allows to calculate tax rate to be applied according to income brackets.
Raising taxes: why has this option become a “red line”?
Freeze only the top slices?
The freezing of such a scale would mechanically have the effect, with l’inflationto increase the amount of tax. According to France 2a single person who wins 2400 euros per monthif he benefits from an increase of fifty euros per month (to compensate for inflation, for example), would have part of his income which would move into the higher bracket, with a tax rate of 30%. He should therefore pay 180 euros more tax per year. So is there cause for concern for the middle class?
For Alain Trannoy, director of studies at the School of Advanced Studies in Social Sciences (EHESS), not so much. It would be a small movement and, due to inflation of only 2%, a “small heaviness”. In his eyes, the effect would be limited because wages will increase little. He recognizes, however, that this would penalize partly the middle classes. To avoid such a scenario, the State would therefore consider freeze only the top slicestaxed at 41% and 45%. Enough to limit damage and avoid popular rebellion?
