Budget 2020: What effects on households?

Brice Fabre, Arthur Guillouzouic (), Chloé Lallemand 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, IPP - Institut des politiques publiques, PJSE - Paris Jourdan Sciences Economiques - 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
Arthur Guillouzouic: IPP - Institut des politiques publiques
Chloé Lallemand: IPP - Institut des politiques publiques
Claire Leroy: IPP - Institut des politiques publiques

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Abstract: This policy brief analyzes the redistributive effects of the social and fiscal policy measures for households coming into force in 2020. Our results highlight an average gain of 1% in disposable income for the 60% of households located in the middle of the income distribution, with a standard of living between €1,274 and €2,803 per month. These increases in disposable income for the middle classes are partly explained by the latest wave of housing tax cuts. The income tax cut is the other important measure of the 2020 budget, and leads to greater gains for households above the median, with a standard of living above €1,778 per month. The poorest 8% of households, below €837 per month, and the wealthiest 5% of households, above €4,034 per month, are little affected by the socio–fiscal measures coming into force in 2020. We then analyze the effect of all the measures coming into force between 2018 and 2020. We observe gains in disposable income for a majority of households, with a maximum of 3.2% of disposable income between the 25th and 75th standard-of-living percentile (including households with a standard of living between €1,274 and €2,435 per month). Only the poorest households, below €789 per month, do not benefit on average from these measures. The wealthiest 1% of households, above €6,880 per month, see their disposable income increase by 2.2%, with an effect of 3.9% for the wealthiest 0.1% of households with a standard of living above €18,689 per month.

Date: 2020-02
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Published in 2020

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