There are many exceptions françaises, and one is the approach to the super-rich. France is the only country in Europe left with a wealth tax. But all the candidates for head of the rightwing UMP party in France—including, most recently, returning former president Nicolas Sarkozy (link in French)—have come out against it as they bid to take on François Hollande in 2017.
This is quite a revelation. Historically, wealth taxes have been a vote-winner in France. The French right has opposed the concept, but since the 1980s, politicians have meddled with the tax at their peril.
Impôt sur les grandes fortunes (IGF)
François Mitterand in 1981 became the first leftist president in postwar France. The following year, he introduced the IGF, which was a progressive tax on taxable assets, topping out at 1.5% on assets above 10 million francs (link in French), or roughly $1.5 million at the time.
It came as part of a slew of leftwing economic policies, including a 39-hour working week and higher pensions. Mitterand’s party lost control of parliament, and the new government, headed by future rightwing president Jacques Chirac, repealed the law in 1987. That decision and the war of words over it was considered partly responsible for Mitterand’s re-election.
Impôt de solidarité sur la fortune (ISF)
In 1989, Mitterand brought back the tax in modified form. The ISF had more bands but a lower top rate, going up to 1.1% on assets above 20 million francs. According to the public accounts, the tax raised 4.5 billion francs from just 125,000 contributors in its first year. This time, the right left the tax alone. “Paralyzed by the unfortunate experience of 1997, right-wing governments from Jacques Chirac to Nicolas Sarkozy, have not dared return to this symbol,” according to Jean-Pierre Robin of Le Figaro (in French, paywall).
Currently, the ISF has six bands going up to 1.5% for income above €10 million, if the net value of your taxable property exceeds €1.3 million.
Some exceptions to what’s taxable: pensions, vintage items more than a century old, literary estate rights, and forestry. The ISF has been jokingly referred to as Incitement de Sortir de la France—an incitement to leave the country.
In 2007, Sarkozy tried to reform the system through the bouclier fiscal—essentially, a wealth cap. The idea was to try to help those who had high values of assets but not much actual income, such as aristocrats who inherit their estates. Sarkozy’s new measure capped total taxes to the French government to no more than 50% of total income in a given year. The respite for the rich didn’t last: The bouclier fiscal was killed off in 2011.
Taxe exceptionnelle de solidarité sur les hautes rémunérations versées par les entreprises
Hollande—who defeated Sarkozy to become the first leftist president since Mitterand—campaigned on the promise of a new top income-tax rate of 75% on incomes above €1 million a year. After some legal back-and-forth, France’s highest court approved the tax at the end of 2013. Actor Gérard Depardieu, who left France for Belgium in response and somehow ended up being granted Russian citizenship, came to symbolize France’s disgruntled rich.
But things have since changed somewhat. Hollande’s approval rating is currently at an astoundingly poor 13% (in French) and France is on the battering end of constant bad economic news and scepticism about its public finances. It is in this new political climate that the returning Sarkozy and his associates have challenged the wealth tax.
Yet the wealth tax has been a staple of French political life for more than 30 years. Don’t bet on it disappearing without a fight.