French senators warn of wealth ‘black box’ in tax system

PARIS – French senators investigating how the rich minimise tax bills warned of increasing opacity of their assets and called for more reporting by the wealthiest.

Information the government has on fortunes has become less exact and less exhaustive over the last 20 years since the state discontinued some surveys and President Emmanuel Macron made changes to wealth tax declarations in 2017, according to the report from the finance committee.

“In seeking to determine whether there were very wealthy households paying no income tax, we uncovered something else: Over the past two decades, household wealth – and especially the wealth of the very richest – has increasingly become a black box,” the committee’s chairman, Claude Raynal, said.

“This situation is troubling both from the standpoint of tax fairness and the quality of public policymaking.”

Wealth and how to tax it is an explosive issue in France, despite a generous social security system that smooths out income disparities more than in many comparable countries.

The matter is likely to feature in elections in 2027 to determine a successor to Macron, who was dubbed “president of the rich” by opposition groups because of his pro-business policies.

The senators said their investigations confirmed earlier findings that around 13,000 households subject to a wealth tax paid zero or negative income taxes in 2024.

According to the report, the richest 10 per cent in France hold around two-thirds of total wealth, which represents around six times annual economic output, compared to three times in 1970.

“We haven’t returned to a society of heirs and rentiers of the Belle Epoque, but we may be closer to it than we thought,” Raynal said.

In recent years, governments have made minor tweaks to the tax code to address calls to reinstate wealth taxes. But the efforts have struggled to navigate the complexities of the system and any changes have brought less revenue than expected.

The Senate committee’s report stopped short of making any specific recommendations for new levies. But it called for measures to increase transparency, including a law to oblige a regular survey of high-net-worth individuals’ household wealth, an updated inheritance database using artificial intelligence, and requirements for banks to report asset holdings of customers. BLOOMBERG