The 2019 French budget: impacts on households

Mahdi Ben Jelloul, Antoine Bozio, Thomas Douenne (), Brice Fabre and Claire Leroy
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Brice Fabre: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique, IPP - Institut des politiques publiques
Claire Leroy: IPP - Institut des politiques publiques

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Abstract: This brief studies the tax and social security reforms affecting households, introduced by the 2019 French budget, including the most recent measures announced in response to the "gilets jaunes" movement. The results reveal a mean increase in disposable income of nearly 1 % for a large share of households, mainly those receiving the in-work benefit (prime d'activité) and households affected by the reduction in the housing tax (taxe d'habitation). We also analyse the effects of the reforms implemented since the start of the current five-year presidential term, i.e. the cumulative effects of the 2018 and 2019 budgets. The mean gains across the whole population are qualitatively similar but hide large variations. The working population gains on average, regardless of living standard percentile (with a mean increase in disposable income of 2.4 %). In contrast, retired people in the most affluent 20 % of households are contributors, with a mean loss of disposable income of 3 %. The disposable income of the most affluent 1 % of households, regardless of whether they are working or not, rises by 6.4 % on average due to the replacement of total wealth tax (impôt de solidarité sur la fortune or ISF) with real estate wealth tax (impôt sur la fortune immobilière or IFI). The original budgetary measures proposed by the government in September 2018 have largely been amended by the emergency economic and social measures. These play a major role in the final redistributive effects. All income categories benefit from these new measures, with a mean increase in disposable income of 0.8 %. These eects are greatest between the 15th and 49th living standard percentiles, with a mean gain of 1.2 %.

Date: 2019-01
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Published in 2019

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Working Paper: The 2019 French budget: impacts on households (2019)
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