A recent report has revealed that the effective tax rate for the wealthiest households in France is regressive, with the top 400 homes paying only 2% of their total revenues in taxes. The study used previously unexplored 2016 administration data to demonstrate the regressive nature of the French tax system.

The report argues that income tax is an inadequate metric for capturing the total income of these households, as it fails to consider share ownership. The report introduces a new metric called 'economic income,' which includes income from company share revenues. When measured by economic income, the average income of the 38,000 wealthiest households increases from €895,000 to €3.4 million per year. Similarly, the average income of France's 75 most affluent households rises from around €36 million to over €1 billion.

The report highlights that many of the wealthiest households in France are company shareholders and the income generated from shareholding is subject to corporate tax rather than personal income tax. This disparity in tax rates contributes to an overall regressive tax burden. The findings of the report add to the ongoing debate on taxing the wealthy both in France and across Europe.

The International Monetary Fund (IMF) has previously recommended the implementation of wealth taxes to address economic inequalities. At the same time, some MEPs and economists have called for a progressive wealth tax to finance the ecological and social transition. Another recent report suggests the creation of a "green" wealth tax, which would involve a 5% levy on the financial assets of the wealthiest 10% and is estimated to generate €150 billion over 30 years.

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