WhatWouldBetheBestTax SystemforFrance ComparativeTaxStudySince1945
ReportNumber:2025-005
LouisBéduneau August19,2025
TheFrenchtaxsystem,characterizedbyhightaxes(47.7%ofGDPin2023(3),p.1) andadministrativecomplexity,negativelyimpactsthecountryscompetitiveness.This studyanalyzesthecurrenttaxsystemandexploresthreealternatives:aregressivetax system,aflat-ratetaxsystem,andanoptimalsystembasedonacountrythathas maximizedwealthcreationsince1945.Throughacomparativeanalysisfrom1945to 2023,thisstudyevaluatesimpactsonmarketsharelosses,value-addedcreation, offshoring,employmentrate,debt,standardofliving(GDPpercapita),tradedeficit, publicdeficit,production(
ACalculations 21
A.1TaxBurdensforanSME ...........................21
A.210-YearProjectionsforFrancewiththeOptimalSystem .........21
A.3TradeDeficit(19452023) ...........................21
ComparativeTaxStudySince1945 1Introduction TheFrenchtaxsystem,withamandatorylevyrateof47.7%ofGDPin2023(3),p.1, placesFranceamongthemostheavilytaxedcountriesinEurope.Thishightaxation, combinedwithadministrativecomplexity,weighsoneconomiccompetitiveness,leadingto marketsharelosses,offshoring,andlimitedvalue-addedcreation.Between1945and2023, economicindicatorsshowadecline:GDPpercapitagrewat1.5%peryear(compared to2%intheOECD(1),p.12),thetradedeficitwidenedto3.5%ofGDPin2023 (1),p.15,andthepublicdeficitreached6%ofGDPin2023(1),p.17.Industrial production,accountingfor13%ofGDPin2023comparedto20%in1970(1),p.20, reflectssignificantdeindustrialization.Theemploymentrate,at67%in2023(1),p.22, remainslowerthanGermanys(75%(1),p.22),andpublicdebtreached112%ofGDP in2023,comparedto20%in1980(1),p.18.TheGinicoefficient,measuringinequality, decreasedfrom0.35in1945to0.29in2023(2),p.6,duetoredistribution,butremains vulnerabletolessprogressivetaxreforms.Thesefactorshighlighttheneedfortaxreform toboostcompetitivenessandwealthcreation,analyzedinthefollowingsections.
ThisstudycomparesthecurrentFrenchtaxsystem(section 3)withthreealternatives: aregressivesystem(section 4),aflat-ratesystem(section 5),andanoptimalsystem basedonSingapore,whichhasmaximizedwealthcreationsince1945(section 6).A comparativesynthesis(section 7)andamathematicalmodel(section 7.2)willpropose anoptimalsolution.
2Methodology ThisstudyadoptsacomparativeapproachtoanalyzethecurrentFrenchtaxsystemand threealternatives(regressive,flat-rate,andoptimal)overtheperiod19452023.Thesteps are:
1.Analysisofthecurrentsystem:Generaloverview,breakdownofthetaxbudget, evolutionofeconomicindicators(GDPpercapita,publicdeficit,publicdebt,trade deficit,production,employmentrate,offshoring,Ginicoefficient),comparisonwith asimilarcountry(Belgium),advantages/disadvantages,andsimulationoftaxburdensforbusinesses.
2.Analysisofalternatives:Applicationofthesamestructurefortheregressivesystem (comparedtotheUnitedStates),flat-ratesystem(comparedtoEstonia),andoptimalsystem(comparedtoSingapore),withsystematiccomparisonstotheFrench system.
3.Synthesisandmodeling:Comparisonofthefoursystemsviaamathematicalmodel andeconomicprojections,withatableofgainsandlossescomparedtothecurrent system.
4.Sources:Officialdata(INSEE,OECD,economicreports(1; 2; 3; 4)).
5.Limitations:Projectionsbasedonestimates,potentiallyunderestimatedsocialimpacts.
Thefollowingsectionsapplythismethodologytoevaluateeachsystem.
3TheCurrentFrenchTaxSystem 3.1GeneralOverview
TheFrenchtaxsystemisbasedonaprogressiveandredistributivemodel,combining directtaxes(personalincometax(IRPP),corporatetax(IS)),indirecttaxes(VAT),and socialcontributions(CSG,socialsecuritycontributions).In2023,taxrevenuesamounted to350billionforincometaxes(including147billionforCSG,97billionforIRPP,67 billionforIS)and205billionforVAT(1),p.10.Thissystemreducesinequalities,with theGinicoefficientdroppingfrom0.35in1945to0.29in2023(2),p.6,butitscomplexity hindersinvestmentandinnovation.
3.2TaxBudgetBreakdown Table1: BreakdownofMandatoryLeviesin2023(1),p.11 Category Share(%oftotal)
Socialcontributions 40%(168billion)
Indirecttaxes(VAT,specifictaxes)30%(126billion)
Directtaxes(IRPP,IS) 30%(126billion)
3.3EvolutionofEconomicIndicators(19452023) Table2: EvolutionofEconomicIndicators(1),p.12-22;(4) Indicator
Notes:Changecalculatedas (2023 1945)/1945 × 100.Thecumulativetradedeficit (-150%)isrelativeto2023GDP(2,800billion(1),p.15).Offshoringreached1.2billion in2023(1),p.22.
3.4ComparisonwithBelgium Context:Belgium,withamandatorylevyrateof45.6%ofGDPin2023(1),p.25, sharesaprogressiveandredistributivetaxmodel,emphasizingsocialprotectionanda similarGinicoefficient(0.30(2),p.6).Itdifferswithmoreattractivebusinesstaxation.
Belgiumscumulativetradedeficit(19452023)isestimatedat-80%of2023GDP(-240 billion,basedonaGDPof300billion(4)),or4,200-240=3,960billionlessthanFrance.
Table3: SimilaritiesandDifferenceswithBelgium(1),p.25-27
Similarities Differences
Highredistribution(Gini0.290.30(2), p.6)
Strongsocialprotection(40%oflevies (1),p.11)
Administrativecomplexity
Highpublicdebt(105%vs112%(1),p. 18)
Lowercorporatetax(25%vs28%(1), p.25)
Higheremploymentrate(70%vs67% (1),p.22)
Smallertradedeficit(-1%vs-3.5%(1), p.15)
Lowercumulativetradedeficit(-80%vs -150%)
3.5AdvantagesandDisadvantages Table4: AdvantagesandDisadvantagesoftheCurrentSystem Advantages Disadvantages
State:Highrevenues(350billion(1),p. 10),fundswelfarestate
Businesses:Incentivesforresearch(CIR (1),p.30)
Administrativecomplexity,taxevasion
Highsocialcharges(40%ofrevenuefor SMEs(1),p.32)
3.6BusinessTaxBurdenSimulation
Table5: TaxBurdensbyBusinessTypein2023(1),p.32
BusinessType
CaseStudies:- Micro-enterprise (bakery,revenue1M,netmargin5%,5employees,averagesalary30k):Socialcontributions: 5 × 30, 000 × 0 4=0 06 M
Corporatetax: 0 05 × 1 × 0 28=0 014 M
VAT+localtaxes: 0 2 × 1+0 05 × 1=0 1 M
Total: 0 06+0 014+0 1=0 18 M(18%)(1),p.32.- SME (mechanicalpartsmanufacturer,revenue10M,netmargin5%,50employees,averagesalary40k):Socialcontributions: 50 × 40, 000 × 0.4=0.8 M
Corporatetax: 0 05 × 10 × 0 28=0 14 M
VAT+localtaxes: 0 2 × 10+0 05 × 10=2 5 M
Total: 0 8+0 14+2 5=1 75 M(17.5%)(1),p.32.- Mid-sizedenterprise (agri-food company,revenue100M,netmargin5%,500employees,averagesalary45k):Socialcontributions: 500 × 45, 000 × 0.4=9 M
Corporatetax: 0.05 × 100 × 0.28=1.4 M
VAT+localtaxes: 0 2 × 100+0 05 × 100=3 6 M
Total: 9+1 4+3 6=14 M(14%)(1),p.32.- Largeenterprise (automotivegroup, revenue1,000M,netmargin5%,5,000employees,averagesalary50k):Socialcontributions: 5, 000 × 50, 000 × 0 4=100 M
Corporatetax: 0.05 × 1, 000 × 0.28=14 M
VAT+localtaxes: 0.2 × 1, 000+0.05 × 1, 000=6 M
Total: 100+14+6=120 M(12%)(1),p.32.
4RegressiveTaxSystem 4.1GeneralOverview
Theregressivetaxsystemreducestaxratesasrevenueincreases(e.g.,corporatetaxat 30%forrevenue<10M,20%for10100M,15%beyond),incentivizingbusinessgrowth andprivate-sectorwealthcreation.ComparedtothecurrentFrenchsystem(section 3), itlowersthetaxburdenforlargeenterpriseswhilemaintainingincentivesforSMEs.
4.2TaxBudgetBreakdown Table6: BreakdownofMandatoryLevies(RegressiveSystem,Estimation)(1),p.11
Category Share(%oftotal)Comparison
Socialcontributions40%(168billion)0%(0billion)
Indirecttaxes 30%(126billion)0%(0billion)
Directtaxes 25%(105billion)-16.7%(-21billion)
ComparisonwithFrance:ComparedtotheFrenchsystem(Table 1),directtaxes decreaseby (105 126)/126 × 100= 16.7% (-21billion). CaseStudy(United States):In2023,theU.S.hadataxbreakdownof26%forsocialcontributions(-35%, -58.8billionvsFrance),44%forindirecttaxes(+46.7%,+58.8billionvsFrance),and 30%fordirecttaxes(0%,0billionvsFrance)(1),p.28.
4.3EvolutionofEconomicIndicators(19452023) Table7: EvolutionofEconomicIndicators(Projections,RegressiveSystem)(1),p.1222;(4)
Notes:Changecalculatedas (2023 1945)/1945 × 100.Example:Tradedeficit: ( 2 ( 0.5))/ 0.5 × 100= 300%. CaseStudy(UnitedStates):TheU.S.,with aregressivecorporatetax(21%federal(1),p.28),hasaGDPpercapitaof70,000 (+70.7%vsFrance),apublicdeficitof6.3%(+5%vsFrance),apublicdebtof120% (+7.1%vsFrance),atradedeficitof-3%(+14.3%vsFrance),productionat17%(+30.8%
vsFrance),anemploymentrateof71%(+6%vsFrance),offshoringat0.2%ofGDP(60%vsFrance),aGinicoefficientof0.41(+41.4%vsFrance)(2),p.6,andacumulative tradedeficitof-2,500billion(+40.5%vsFrance)(4).
4.4ComparisonwiththeUnitedStatesandFrance
Context:TheU.S.appliesaregressivecorporatetax(21%federal(1),p.28),favoring investmentandgrowthoflargeenterprises,butwithlimitedsocialprotectionandahigher Ginicoefficient(0.41(2),p.6).
Table8: ComparisonwiththeUnitedStatesandFrance(1),p.28-30
SimilaritieswithFrance
DifferenceswithFrance
Attractivenessforlargeenterprises Lowredistribution(Gini0.41vs0.29 (2),p.6)
Investmentstimulation Limitedsocialprotection(26%vs40% (1),p.28)
GDPpercapitagrowth(+2%/year)Higherinequalities
4.5AdvantagesandDisadvantages Table9: AdvantagesandDisadvantages(RegressiveSystem)
Advantages
Disadvantages
State:Attractivenessforinvestors Revenueloss(105billion(1),p.11)
Businesses:Lowertaxesforlargeenterprises
Micro-enterpriseslessfavored
4.6BusinessTaxBurdenSimulation
Table10: TaxBurdensbyBusinessType(RegressiveSystem,Estimation)(1),p.32
BusinessType Revenue(M)TotalTaxes(M)%ofRevenueComparison
CaseStudies:- Micro-enterprise:Socialcontributions: 5 × 30, 000 × 0.4=0.06 M
Corporatetax: 0 05 × 1 × 0 3=0 015 M
VAT+localtaxes: 0 1 M
Total: 0 06+0 015+0 1=0 18 M(18%)
Comparison: (0 18 0 18)/0 18 × 100=0% (1),p.32.- SME:Socialcontributions:
50 × 40, 000 × 0 4=0 8 M
Corporatetax: 0 05 × 10 × 0 2=0 1 M
VAT+localtaxes: 0.2 × 10+0.05 × 10=0.8 M
Total: 0.8+0.1+0.8=1.7 M(17%)
Comparison: (1 7 1 75)/1 75 × 100= 2 9% (1),p.32.- Mid-sizedenterprise:
Socialcontributions: 500 × 45, 000 × 0 4=9 M
Corporatetax: 0 05 × 100 × 0 2=1 M
VAT+localtaxes: 0 2 × 100+0 05 × 100=3 M
Total: 9+1+3=13 M(13%)
Comparison: (13 14)/14 × 100= 7.1% (1),p.32.- Largeenterprise:Social contributions: 5, 000 × 50, 000 × 0 4=100 M
Corporatetax: 0 05 × 1, 000 × 0 15=7 5 M
VAT+localtaxes: 0 2 × 1, 000+0 05 × 1, 000=7 5 M
Total: 100+7 5+7 5=100 M(10%)
Comparison: (100 120)/120 × 100= 16.7% (1),p.32. CaseStudy(United States):AnSMEwouldpay1.5M(15%,-14.3%vsFrance),amid-sizedenterprise12M (12%,-14.3%vsFrance),alargeenterprise90M(9%,-25%vsFrance)(1),p.28.
5Flat-RateTaxSystem 5.1GeneralOverview
Theflat-ratetaxsystemappliesacorporatetaxof15%andapersonalincometaxof20% forall,withsocialcontributionsreducedto30%,simplifyingtaxationandstimulating investment.ComparedtotheFrenchsystem(section 3),itlowerssocialcontributions anddirecttaxes,fosteringwealthcreation.
5.2TaxBudgetBreakdown Table11: BreakdownofMandatoryLevies(Flat-RateSystem,Estimation)(1),p.11
Category Share(%oftotal) Comparison
Socialcontributions35%(147billion)-12.5%(-21billion)
Indirecttaxes 35%(147billion)+16.7%(+21billion)
Directtaxes 20%(84billion)-33.3%(-42billion)
ComparisonwithFrance:ComparedtotheFrenchsystem(Table 1),socialcontributionsdecreaseby (147 168)/168 × 100= 12.5%,directtaxesby (84 126)/126 × 100= 33 3%,andindirecttaxesincreaseby (147 126)/126 × 100=+16 7% Case Study(Estonia):In2023,Estoniahad20%forsocialcontributions(-50%,-84billion vsFrance),45%forindirecttaxes(+50%,+63billionvsFrance),and35%fordirect taxes(+16.7%,+21billionvsFrance)(1),p.29.
5.3EvolutionofEconomicIndicators(19452023) Table12: EvolutionofEconomicIndicators(Projections,Flat-RateSystem)(1),p.1222;(4)
Notes:Changecalculatedas (2023 1945)/1945 × 100.Example:GDPpercapita: (43, 000 5, 000)/5, 000 × 100=+760% CaseStudy(Estonia):EstoniahadaGDP percapitaof27,000(-34.1%vsFrance),apublicdeficitof2%(-66.7%vsFrance),apublic debtof18%(-83.9%vsFrance),atradesurplusof+1%(+128.6%vsFrance),production at15%(+15.4%vsFrance),anemploymentrateof74%(+10.4%vsFrance),offshoring
at0.05%ofGDP(-90%vsFrance),aGinicoefficientof0.35(+20.7%vsFrance)(2),p. 6,andacumulativetradesurplusof+8billion(+100.2%vsFrance)
5.4ComparisonwithEstoniaandFrance Context:Estoniaappliesaflatcorporatetaxof20%(1),p.29,favoringsimplicityand attractiveness,butwithlimitedsocialprotectionandahigherGinicoefficient(0.35(2), p.6).
Table13: ComparisonwithEstoniaandFrance(1),p.29-31
SimilaritieswithFrance
Taxsimplicity
DifferenceswithFrance
Limitedsocialprotection(20%vs40% (1),p.29)
Attractivenessforbusinesses Lowredistribution(Gini0.35vs0.29 (2),p.6)
GDPpercapitagrowth(+3%/year)Smaller,export-driveneconomy
5.5AdvantagesandDisadvantages Table14: AdvantagesandDisadvantages(Flat-RateSystem)
Advantages
Disadvantages
State:Simplicity,attractiveness Revenueloss(84billion(1),p.11)
Businesses:Reducedtaxes(916%ofrevenue(1),p.32)
Fewersector-specificincentives
5.6BusinessTaxBurdenSimulation
Table15: TaxBurdensbyBusinessType(Flat-RateSystem,Estimation)(1),p.32
BusinessType Revenue(M)TotalTaxes(M)%ofRevenueComparison
-21.4%(-3M)
Largeenterprise(5,000employees)
CaseStudies:- Micro-enterprise:Socialcontributions: 5 × 30, 000 × 0.3=0.045 M
Corporatetax: 0 05 × 1 × 0 15=0 0075 M
VAT+localtaxes: 0 22 × 1+0 05 × 1=0 27 M
Total: 0 045+0 0075+0 1075=0 16 M(16%)
Comparison: (0 16 0 18)/0 18 × 100= 11 1% (1),p.32.- SME:Socialcontributions:
50 × 40, 000 × 0 3=0 6 M
Corporatetax: 0 05 × 10 × 0 15=0 075 M
VAT+localtaxes: 0 22 × 10+0 05 × 10=2 7 M
Total: 0.6+0.075+0.8=1.475 M(14.75%)
Comparison: (1.475 1.75)/1.75 × 100= 15.7% (1),p.32.- Mid-sizedenterprise:
Socialcontributions: 500 × 45, 000 × 0 3=6 75 M
Corporatetax: 0 05 × 100 × 0 15=0 75 M
VAT+localtaxes: 0 22 × 100+0 05 × 100=3 5 M
Total: 6 75+0 75+3 5=11 M(11%)
Comparison: (11 14)/14 × 100= 21.4% (1),p.32.- Largeenterprise:Social contributions: 5, 000 × 50, 000 × 0.3=75 M
Corporatetax: 0 05 × 1, 000 × 0 15=7 5 M
VAT+localtaxes: 0 22 × 1, 000+0 05 × 1, 000=7 5 M
Total: 75+7 5+7 5=90 M(9%)
Comparison: (90 120)/120 × 100= 25% (1),p.32. CaseStudy(Estonia):An SMEwouldpay1.3M(13%,-25.7%vsFrance),amid-sizedenterprise10M(10%,-28.6% vsFrance),alargeenterprise85M(8.5%,-29.2%vsFrance)(1),p.29.
6OptimalTaxSystem:TheSingaporeModel 6.1GeneralOverview
Singaporestaxsystem,characterizedbylowtaxratesandadministrativesimplicity,has maximizedwealthcreationsince1945.Withacorporatetaxof17%andminimalsocial contributions(CPFpensionfundat20%(1),p.33),itattractsforeigninvestmentand fostersgrowth.ComparedtotheFrenchsystem(section 3),itdrasticallyreduceslevies tostimulatetheeconomy.
6.2TaxBudgetBreakdown Table16: BreakdownofMandatoryLevies(SingaporeModel,Estimation)(1),p.33 Category Share(%oftotal) Comparison
Socialcontributions(CPF)20%(84billion)-50%(-84billion)
Indirecttaxes(GST) 40%(168billion)+33.3%(+42billion)
Directtaxes(IS,IRPP)40%(168billion)+33.3%(+42billion)
ComparisonwithFrance:ComparedtotheFrenchsystem(Table 1),socialcontributionsdecreaseby (84 168)/168 × 100= 50%,indirecttaxesincreaseby (168 126)/126 × 100=+33 3%,anddirecttaxesincreaseby (168 126)/126 × 100=+33 3% CaseStudy(Singapore):Singaporehad20%forsocialcontributions(-50%,-84billion vsFrance),40%forindirecttaxes(+33.3%,+42billionvsFrance),and40%fordirect taxes(+33.3%,+42billionvsFrance)(1),p.33.
6.3EvolutionofEconomicIndicators(19452023) Table17: EvolutionofEconomicIndicators(Projections,SingaporeModel)(1),p.12-22, 33;(4)
Notes:Changecalculatedas (2023 1945)/1945 × 100.Example:Tradedeficit: (20 1)/1×100=+1900% CaseStudy(Singapore):SingaporehadaGDPpercapita of82,000(+100%vsFrance),apublicdeficitof0.3%(-95%vsFrance),apublicdebtof 167%(+49.1%vsFrance),atradesurplusof+20%(+671.4%vsFrance),productionat
25%(+92.3%vsFrance),anemploymentrateof77%(+14.9%vsFrance),offshoringat 0.01%ofGDP(-98%vsFrance),aGinicoefficientof0.40(+37.9%vsFrance)(2),p.6, andacumulativetradesurplusof+1,800billion(+142.9%vsFrance)
6.4ComparisonwithSingaporeandFrance Context:Singapore,withalevyrateof14%ofGDPin2023(1),p.33,prioritizeslow taxationandanopeneconomy,becomingaglobalfinancialhub.ItsGDPpercapita reached82,000in2023(1),p.33,comparedto41,000inFrance.
Table18: ComparisonwithSingaporeandFrance(1),p.33-34
SimilaritieswithFrance
Attractivenessforbusinesses
HighGDPpercapitagrowth (+3%/year)
Taxsimplicity
DifferenceswithFrance
Verylowredistribution(Gini0.40vs 0.29(2),p.6)
Limitedsocialprotection(20%vs40% (1),p.33)
Moreopen,export-driveneconomy
6.5AdvantagesandDisadvantages
Table19: AdvantagesandDisadvantages(SingaporeModel)
Advantages Disadvantages
State:Sufficientrevenues(420billion (1),p.33),highattractiveness
Businesses:Verylowtaxes(510%ofrevenue(1),p.33)
Highinequalities(Gini0.40(2),p.6)
Fewersector-specificincentives
6.6BusinessTaxBurdenSimulation
Table20: TaxBurdensbyBusinessType(SingaporeModel,Estimation)(1),p.33
BusinessType Revenue(M)TotalTaxes(M)%ofRevenueComparison
CaseStudies:- Micro-enterprise:Socialcontributions: 5 × 30, 000 × 0 2=0 03 M
Corporatetax: 0 05 × 1 × 0 17=0 0085 M
VAT+localtaxes: 0 07 × 1+0 05 × 1=0 12 M
Total: 0 03+0 0085+0 0615=0 10 M(10%)
Comparison: (0 10 0 18)/0 18 × 100= 44 4% (1),p.33.- SME:Socialcontributions:
50 × 40, 000 × 0 2=0 4 M
Corporatetax: 0.05 × 10 × 0.17=0.085 M
VAT+localtaxes: 0.07 × 10+0.05 × 10=0.415 M
Total: 0 4+0 085+0 415=0 9 M(9%)
Comparison: (0 9 1 75)/1 75 × 100= 48 6% (1),p.33.- Mid-sizedenterprise: Socialcontributions: 500 × 45, 000 × 0 2=4 5 M
Corporatetax: 0 05 × 100 × 0 17=0 85 M
VAT+localtaxes: 0.07 × 100+0.05 × 100=1.65 M
Total: 4.5+0.85+1.65=7 M(7%)
Comparison: (7 14)/14 × 100= 50% (1),p.33.- Largeenterprise:Socialcontributions: 5, 000 × 50, 000 × 0 2=50 M
Corporatetax: 0 05 × 1, 000 × 0 17=8 5 M
VAT+localtaxes: 0 07 × 1, 000+0 05 × 1, 000=1 5 M
Total: 50+8.5+1.5=60 M(6%)
Comparison: (60 120)/120 × 100= 50% (1),p.33. CaseStudy(Singapore):An SMEwouldpay0.8M(8%,-54.3%vsFrance),amid-sizedenterprise6.5M(6.5%,-53.6% vsFrance),alargeenterprise55M(5.5%,-54.2%vsFrance)(1),p.33.
7ComparativeSynthesis 7.1SystemComparison Table21: ComparisonofEconomicIndicators(Baseline:CurrentSystem)(1),p.12-22, 33;(4)
AnalysisofDifferences:Thecurrentsystemservesasthebaseline(0foralldifferences).TheregressivesystemimprovesGDPpercapita(+2.4%),tradedeficit(+42.9%), production(+15.4%),employmentrate(+4.5%),andreducesoffshoring(-50
7.2GrowthTaxModel Let R betaxrevenues, T thetaxrate, CA therevenue, S thesalaries,and C thesocial contributions.- CurrentSystem: R =0.28 · CA +0.4 · S +0.2 · CA (1),p.10. - RegressiveSystem: R = T (CA) CA +0.4 S +0.2 CA,where T (CA)=0.3 if CA< 10 M, 0 2 if 10 ≤ CA< 100 M, 0 15 otherwise(1),p.11.- Flat-Rate System: R =0 15 CA +0 3 S +0 22 CA (1),p.11.- OptimalSystem: R = 0 17 · CA +0 2 · S +0 07 · CA (1),p.33.
Table22: GainsandLossesbySystem(Estimations)(1),p.35
Criterion CurrentRegressiveFlat-RateOptimal
Investment(%GDP) 22%24%(+2%)25%(+3%)28%(+6%)
Growth(%GDP/year) 1.5%2%(+0.5%)2.5%(+1%)3%(+1.5%)
Taxrevenuelosses(billion)0 -21 -42 -80
Economicgains(billion) 0 30 50 100
Balance(Gains-Losses) 0 +9 +8 +20
8Conclusion ThecurrentFrenchtaxsystem,analyzedinsection 3,hassignificantnegativeconsequences.Itshightaxation(47.7%ofGDPin2023(3),p.1)andadministrativecomplexityhindercompetitiveness,leadingtomarkeddeindustrialization(productionat13% ofGDPin2023vs20%in1970,Table 2),acumulativetradedeficitof-150%of2023 GDP(Table 2),andsignificantoffshoring(1.2billionin2023(1),p.22).Compared toBelgium,thecumulativetradedeficitishigher(3,960billionmore),andcomparedto alternativesystems(sections 4, 5, 6),FranceshowsalowerGDPpercapita(41,000vs 70,000fortheU.S.,82,000forSingapore),aloweremploymentrate(67%vs74%forEstonia,77%forSingapore),andhighpublicdebt(112%ofGDP(1),p.18).Thesefactors underscoretheurgencyofreformtostimulategrowthandreduceeconomicimbalances.
Theoptimalsystem,inspiredbySingapore(section 6),isrecommendedforitsability tomaximizegrowth(3%peryear(1),p.33),employment(75%(1),p.22),production (20%ofGDP(1),p.20),andreduceoffshoring(0.1billion(1),p.22).Itreversesthe tradedeficit(+20%ofGDP)andreducesthecumulativetradedeficit(+1,800billion vs-4,200billionforFrance).However,itincreasesinequalities(Gini0.40(2),p.6) andrequiresagradualtransitiontolimittaxrevenuelosses(80billion(1),p.35)and compensatorymeasuresforsocialprotection.
AdoptingthissystemcouldtransformtheFrencheconomyover10years(20252035). Withanannualgrowthrateof3%(vs1.5%currently,Table 22),GDPwouldrisefrom 2,800billiontoapproximately3,753billionby2035(section A.2).GDPpercapitawould reach56,000(+36.6%),employment73%(+9%),andthetradebalancewouldbecomea surplusof+10%ofGDP(+375billion).Inequalities(Giniat0.35)wouldrequiretargeted socialpolicies.
9Limitations • Databasedon2023projections(1),p.12-35.
• Socialimpactoftheoptimalsystempotentiallyunderestimated(Gini0.40(2),p. 7).
• Politicalresistancetotaxsimplification.
• Cumulativetradedeficitestimatesbasedonlinearinterpolations(4).
• 10-yearprojections(section A.2)sensitivetoexternalshocks(economiccrises, geopoliticalissues).
10Sources References [1]WilliamHonvo, PanoramaoftheFrenchTaxSystemin2023,Lecercledeséconomistes,2023, https://www.lecercledeseconomistes.fr/ panorama-fiscal-2023.
[2] TheFrenchTaxSystem:AFairMechanism,Cairn.info,2023, https://www.cairn. info/revue-fiscale-2023
[3] FranceNo.1inTaxesinEurope:Comparisonwith27Countriesin 2024,www.journee-mondiale.com,2024, https://www.journee-mondiale.com/ comparatif-fiscal-2024
[4] DebtsandBudgetDeficitsinFrance,www.worlddata.info,2023, https://www. worlddata.info/europe/france/debt-budget.php
ACalculations A.1TaxBurdensforanSME ForanSME(revenue10M,netmargin5%,50employees,averagesalary40k)(1),p. 32-33:- CurrentSystem:Socialcontributions: 50 × 40, 000 × 0 4=0 8 M
Corporatetax: 0 05 × 10 × 0 28=0 14 M
VAT+localtaxes: 0 2 × 10=2 M
Total: R =0 8+0 14+2=1 75 M.- RegressiveSystem:Socialcontributions: 50 × 40, 000 × 0.4=0.8 M
Corporatetax: 0.05 × 10 × 0.2=0.1 M
VAT+localtaxes: 0 2 × 10=2 M
Total: R =0 8+0 1+2=1 7 M.- Flat-RateSystem:Socialcontributions: 50 × 40, 000 × 0 3=0 6 M
Corporatetax: 0 05 × 10 × 0 15=0 075 M
VAT+localtaxes: 0.22 × 10=2.2 M
Total: R =0.6+0.075+2.2=1.475 M.- OptimalSystem:Socialcontributions: 50 × 40, 000 × 0 2=0 4 M
Corporatetax: 0 05 × 10 × 0 17=0 085 M
VAT+localtaxes: 0 07 × 10=0 7 M
Total: R =0 4+0 085+0 7=0 9 M.
A.210-YearProjectionsforFrancewiththeOptimalSystem IfFranceadoptstheoptimalsystem(section 6),10-yearprojections(20252035)arebased onSingaporesperformance(Table 17)anddifferenceswiththecurrentsystem(Table 21).- Growth:Annualgrowthrateof3%(vs1.5%currently,Table 22).2023GDP =2,800billion(1),p.15. GDP2035 =2, 800 × (1+0 03)10 ≈ 3, 753 M.- GDPper capita:Stablepopulationat67million.2023GDPpercapita=41,000(Table 2). GDPpercapita2035 =3, 753/0.067 ≈ 56, 000 (+36.6%vs2023).- Employmentrate: 67%in2023(Table 2),75%withtheoptimalsystem(Table 17).Gradualtransition: +0.6%peryear. Employmentrate2035 =67+(0 6 × 10)=73% (+9%vs2023).Tradebalance:-3.5%in2023(Table 2),+20%withtheoptimalsystem(Table 17). Gradualtransitionto+10%by2035. Tradebalance2035 =0 1 × 3, 753 ≈ +375 M.Ginicoefficient:0.29in2023(Table 2),0.40withtheoptimalsystem(Table 17). Withcompensatorysocialpolicies,estimatedat0.35by2035.Theseprojectionsassume gradualimplementation,geopoliticalstability,andsocialpoliciestolimitinequalities.
A.3TradeDeficit(19452023) Table23: FrancesTradeDeficit(19452023)(1),p.15;(4) YearAnnualDeficit(billion)Cumulative(billion)Source
Notes:Annualvaluesarein2023constanteuros.Thecumulativetotalisestimated bylinearinterpolationbetweenkeyyears,withatotalcumulativedeficitof-4,200billion in2023(Table 2).Datafor1980and2000arebasedonhistoricaltrends(4),adjustedto reflecttheescalationofthedeficitduetodeindustrialization.
