The amount of inheritance tax collected by the State in France has increased by 120% over the past decade, and the percentage of taxable inheritances has doubled during the same period. In France, inheritance taxation is on average three and a half times higher than the European average. Despite this heavy taxation, several voices have recently proposed to significantly increase the tax burden on wealth, especially on entrepreneurial families. Think tank Terra Nova recommends taxing the “super-rich”: why and how to do it? The non-governmental organization Oxfam is outraged by the “super-inheritances: the fiscal jackpot of the ultra-rich”, while La France insoumise (LFI) is considering taxing 100% of wealth transferred through inheritance beyond 12 million euros.
These proposals seem fallacious and dangerous. Fallacious first, because, arguing the supposedly abnormal nature of family ownership of a few very large industrial groups representing billions in market value, they actually end up proposing to increase taxation from much lower levels – for example, capping the Dutreil pact at 2 million euros for Oxfam. In reality, it is the middle classes and the majority of small and medium-sized family businesses in France that are targeted. These proposals are especially dangerous because their implementation would inevitably lead to a rapid destruction of the French industrial fabric and a major loss of national sovereignty over our economy.
It is important to remember that many French companies of all sizes are still owned by families, and this model is very virtuous as it promotes their anchoring in territories and long-term management of their development. In order for a company to remain in the family, the tax pressure on shareholders must not prevent them from retaining control of the capital. The unique aspect of the wealth of these families lies in the fact that it is permanently invested in the company, which often represents more than 90% of their total assets, and this wealth is neither liquid nor divisible.
It is worth noting that while the valuation of some companies may seem significant in absolute terms, this value is particularly fluctuating and remains theoretical until they are sold. Only the salary and especially the dividend paid by the company can allow these families to pay the taxes based on their wealth (wealth tax and inheritance tax), knowing that the dividend itself is subject to tax due on distribution. The theoretical value of certain companies plays a role in the inheritance tax debate, as families with most of their wealth tied up in their business may struggle to pay high taxes without selling part of the company. This unique situation requires careful consideration to ensure that the tax burden does not hinder the long-term stability and growth of these businesses.
