Réformer la fiscalité française pour faire face à la concurrence fiscale

There is increasing evidence that tax competition amongst EU member states has been mounting over the past two decades, and has become fiercer since the latest enlargement in 2004. The completion of monetary union is also likely to aggravate this tendency, by making other instruments of non-cooperative strategies, in particular currency devaluations, unavailable. France is particularly exposed to tax competition, because of its high overall tax pressure and the concentration of tax burden on the more mobile taxpayers (high-income earners, wealth holders and firms). This paper describes a tax reform proposal that has been designed with the objective of responding to tax competition. It is meant to preserve total tax revenues and leaving the after-tax income distribution unchanged compared to current one. It simplifies direct taxation by abolishing the personal wealth tax, merging personal income tax with the general social contribution into a three-bracket general income tax, and alleviating corporate income taxation. JEL codes: H20, H73, H87.