The economic gap between the French widens as wealth is concentrated in the hands of a tiny minority. At a time when the debate on tax justice is raging, a recent study by the Directorate General of Public Finance (DGFIP) paints a portrait of 0.1 % of the wealthiest French people, which reveals a fracture increasingly marked with the rest of the population. Who are these 74,500 households that make up this financial elite? What are their income, the structure of their assets (real estate) and how has their situation evolved in recent decades?
Colossal fortunes and extraordinary income
For two decades, the concentration of the wealth at the top has intensified, which has given birth to a financial elite whose profile is radically distinguished from the rest of the French. The entry into this closed circle of very high heritage (THP) requires holding a minimum of 2.7 million euros in assets (real estate and financial investments combined). In 2016, the average heritage of these homes reached 10.2 million euros, or almost double the 5.3 million recorded in 2003. Unlike the majority of French people, who favor real estate, 79 % of the wealth of the most Rich is based on movable assets, mainly financial investments and shares in businesses. A strategic orientation which enabled them to capitalize on the developments of the financial markets and to considerably increase their fortune.
The very high incomes (THR), for their part, constitute the other half of this elite. To be part of the club, it is necessary to justify an annual income of more than 463,000 euros. But the average of this group amounts to 1.03 million euros per year, a figure more than 30 times higher than the average income of other French. Their particularity lies in the diversity of their sources of income: high salaries, dividends, business profits, property income and retirement pensions. Unlike the rest of the population, 90 % of which come exclusively from wages and pensions, THR optimize their financial flows by multiplication the remuneration channels.
A concentration of wealth shaped by taxation and age
Tax and demographic choices play a crucial role in the structuring of this elite. Thus, far from being homogeneous, it is divided into distinct categories, with various implications on the evolution of the distribution of wealth. Since 2003, THR revenues have increased by 119 %, while those of other households have increased only by 46 % over the same period. Several factors explain this gap. On the one hand, the introduction of the single flat -rate levy (flat tax) in 2018 favored gains from financial investments by capping their taxation at 30 %, well below the progressive income tax scale. On the other hand, the multiple adjustments of solidarity tax on wealth (ISF), replaced by tax on real estate wealth (IFI) in 2017, indirectly contributed to this accumulation through the exclusion of securities of the taxable base.
The typical profile of THP and THR differs clearly from the rest of the French population. 76 % of very high heritages are over 61 years old, which reflects a wealth often resulting from an accumulation process over several decades, even a legacy. Conversely, only 32 % of very high incomes exceed this age, which shows that high income does not always guarantee a substantial heritage in the short term. In addition, 69 % of highly affluent homes are married, against only 42 % in the rest of the population. This rate even reaches 74 % for THR, which reflects more marked matrimonial stability among large fortunes.
The rapid evolution of the riches of this ultra-it-as-old minority causes major questions about tax equity and the distribution of wealth in France. If this financial elite has been able to take advantage of tax reforms and financial investments, its increased exposure to economic fluctuations can also be a vulnerability factor. The 2009 and 2012 crises had thus resulted in a drop of 8.5 % and 6.4 % of their income respectively, which proves that their prosperity is partly based on cyclical dynamics.
While the question of a more progressive tax reform resurfaces, two visions are opposed. Should we further impose these 75,000 ultra-rich households to reduce inequalities, or promote their investment dynamics to maintain economic competitiveness? The extreme concentration of the riches at the top feeds a debate which, in doubt, will continue to animate political and economic discussions in the years to come.
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