While Austria, the Czech Republic, Portugal, Sweden and Norway have abolished all inheritance taxes, a think tank in France is re-launching the idea of increasing the tax on inheritance. It is putting the oil on fire in the middle of a social crisis because the inheritance taxes are a double taxation.
They are double taxation because they tax assets that have already been taxed or even taxed. The family home that has been paid for almost a life and has been taxed all the time with registration and transfer fees, land registration fee, mandatory valuation fees, sales publication, mortgage retention , urban planning documents or extracts from land register, house tax, land tax and for some, income tax, wealth or fortune.
Inheritance tax on succession tax
Similarly, the inheritance of the parents' living room or car was taxed at the time of purchase with a VAT rate generally close to 20% and will be taxed again during the succession (furniture is valued at 5% excluding inventory). There will be double impositions again.
It is the same – the height of the absurdity – of the property that has already been taxed in a first succession and is again in a second succession. If you inherit a property and pay the estate tax and keep the property, such as your parents' furniture, the Peugeot 404 Papy, a studio in the city, a three-room apartment in the province, the property will be taxed again when you inherit it your death.
Your heirs may have to pay a 40% inheritance tax on the property on which you already paid 40% success tax a few years ago.
From the French revolution of 1789 to the law of 25 February 1901, direct inheritance taxes, that is between parents and children, were 1%, fixed and unique, applicable to all transmissions. This rate then gradually became progressive with a whole series of exemptions and deductions. Today, it can reach 45% and there are 42 succession plans in France.
Some are trying to focus the debate on inequalities between rich and poor, but it is a false debate. The real debate about inequalities is found first of all in dietary differences and in people who transmit an inheritance. For example, among those who have children and those who do not. The first will be able to transmit with an exemption of 100,000 euros per child while the latter will not be able to do so.
Inheritance taxes are also unjust because they penalize smaller people more. Even in a system of progressive rates of succession, the burden of fiscal pressure is heavier (in relative value) for those at the bottom of the scale. Paying 10% out of 50,000 euros (or 5,000 euros) is almost always "heavy" than paying 20% out of 250,000 euros (50,000 euros) because at the end of the race the remaining 200,000 euros are much more "comfortable" than the only 45,000 euros .
Instead of trying to increase inheritance taxes to encourage cash flow to finance public spending, experts should look first at ways to reduce these expenses. We should also seriously consider following the example of our Austrian, Swedish and Portuguese friends who are no more stupid than we are.
Eric Gardner of Béville
is a member of Cercle Montesquieu.