Contenu du sommaire : Fiscalité et redistribution

Budget Aggregates Taxation: Some Proposals, by Jean Bensaïd and Marc Fleurbaey. This article endeavours to show that a budget aggregates approach can lead to a tax policy with ambitious redistributive goals without sacrificing economic efficiency. The principles arising from such an analysis are as follows: - The most suitable taxation formula for earned income is the hourly wage rate; - Unearned income and earned income should be taxed separately; - Taxation should take account of the size of the household independently of the progressiveness of the tax; the taxation of couples should differentiate between earned income and other income by allocating to each individual at least half of each component of the total income.

Speculation on Simplifying Personal Income Tax, by Réjane Hugounenq and José Sastre Descals. This study analyzes changes in the structure of personal income tax from the point of view of a thorough reform of the entire system of tax and social security contributions. The aim is to simplify the system, broaden the tax base and erase the anomalies observed in the spread of marginal tax rates by eliminating tax relief, reductions and the minimum collection rate as well as altering the tax scale. The proposed reforms reduce the marginal tax rates and improve the system's redistributive properties (as plotted on a Lorenz curve). It is observed that political decision-makers have a fair amount of room for manoeuvre in implementing these improvements as regards the choices of gains and losses relating to the various classes of revenue. Finally and not surprisingly, a choice necessarily needs to be made in the short term between a broadening of the tax base and redistribution.

Empirical Evaluation of Some Income Tax Reforms, by François Legendre. The purpose of this study is to propose and evaluate some radical income tax reforms in France using a representative sample of nearly forty thousand tax returns. We endeavour to respect to the utmost the current breakdown of the tax burden and develop a non-linear least squares method to obtain the parameters for the new tax scales. The existing system is described in brief so as to identify its most undesirable effects. Nevertheless, it is stressed that the optimal taxation theory does not give a precise indication of the directions that the reform of a progressive tax could take. The reference reform applied here does not present socially acceptable redistributive results. However, it is possible to obtain a dominant reform (from the point of view of equity) by introducing a reimbursable tax credit. The somewhat unrealistic nature of this latter proposal substantiates the idea that a wider reform of the system of tax and social security contributions should be undertaken.

Bringing the Reform of Income Tax into Perspective, by Jean Bensaïd and Eric Desquesses. The article proposes an analysis of income tax in France and the reform of the scale introduced by the 1994 French Finance Law. The first part shows that income tax represents a modest share of all direct household tax and social security contributions as compared with the situation in other leading developed countries. Moreover, it is shown to be more progressive for an equivalent redistributive effect. The second part studies the main consequences of the recent reform of the income tax scale: simplification of calculation methods, decrease in the average rate concentrated on families and high incomes, and a drop in the average marginal tax rates. In general, however, income tax is more progressive and less redistributive than before the reform.

The Development of the Egalitarian Character of Tax and Social Security Contributions under the Fifth Republic: A Supplement, by Rachel Loquet, Jerry Rafaliarison and Alain Trannoy. The purpose of this article is to expand the study on the comparison between the egalitarian nature of the income tax scale and social security contributions from 1959 to 1989, as undertaken by Trannoy et al (1991 Economie et Prévisions, Taxation Studies). In common with the previous study, this research restricts its focus to the study of the typical case of the single employee. This time, however, employers' social contributions are taken into account and social contributions paid under the "solidarité" scheme placing the long-term unemployed in short-term jobs are distinguished from other social contributions. The other enhancement consists of obtaining results using four samples of fiscally single individuals for 1984 and 1988. The recurrent observation fits in with the Lorenz-curve domination of the 1970s scales, sometimes by those of the 1980s and sometimes by those of the 1960s, depending on the case considered.

Evaluation of the Budgetary and Redistributive Effects of French Indirect Tax Reforms, by Véronique Nichèle and Jean-Marc Robin. This article assesses the impact of two French indirect tax reforms: the levying of a tax on barrels of oil with the aim of reducing carbon dioxide emissions and the bringing of VAT more into line with initial European Commission recommendations. The effects of the reforms are simulated using the estimated results from a model of household consumption behaviour. These results are obtained by applying the exact aggregation property of the AI model (Almost Ideal demand system) to the data from the last three Budgets des Familles (Family Budgets) surveys combined with aggregate data from the French national accounts from 1970 to 1990. Simulations are made on a subsample of the 1989 "Budgets des Familles" survey. They provide extremely useful results as regards the impact of reforms on government tax revenues and their redistributive effects.

Simulations of Direct and Indirect Household Taxation Reforms in France, by François Laisney, Martin Mühleisen, Matthias Staat and Stefan Vögele. This article studies how the welfare of French households is affected by the simultaneous implementation of an indirect tax reform (different variants of the first VAT harmonization proposal made by the European Commission) and a direct tax reform (different variants of an attenuation of the income-split tax system, a particularity of the French tax system that could be interpreted as aiming to adapt the tax burden to the demographic make-up of households) on constant tax revenue. A comparison is made between two reference-situation grading approaches combined with two approaches simulating household reactions to changes in the tax system. One of these approaches takes into account the existence of fixed labour costs. The two approaches show that the implementation of the Commission's proposal, which keeps the reduced rate stable, can be favourable to a small majority of the households studied (although a status quo is preferable on the basis of a number of other criteria). However, they also find that the normal rate ensuring the steadfastness of tax revenue goes beyond the limits imposed by the Commission. On the other hand, although the simultaneous introduction of an attenuation ofthe income-split tax system brings the normal rate back down in the desired space of time and thus reduces the level of prices, the associated reform is clearly less desirable than that concerning VAT only. This result runs counter to the opinion that tax breaks with respect to the income-split tax system are only significant for the wealthiest households.

Estimation of a Comprehensive System of Goods Demand and Labour Supply for a Sample of French Households, by Richard Blundell, François Laisney and Matthias Ruth. In order to obtain a comprehensive demand system compatible with life-cycle decisions, previously obtained estimation results for the married-woman labour supply are used to identify the virtually homothetic preference parameters defined for 16 categories of goods estimated for a sample of married-couple households taken from the INSEE Budget des Familles 1978-1979 survey. Four systems are differentiated according to whether or not the household reports purchases in the tobacco and alcohol categories. The other possible zero outlays are treated as resulting from the "purchase infrequency" phenomenon. Minimal consumption is parameterized in great detail according to socio-demographic characteristics, by placintg the emphasis on a symmetrical handling of the characteristics of the husband and the wife. Diagnoses of the hypothesis of the separability of leisure and goods preferences, on which the adopted estimation strategy is based, clearly reject the hypothesis for the four goods categories of "clothing dans shoes", "durables", "transport and communication" and "VAT-reduced rate services". This result could be due to the existence of fixed business costs for these goods categories.

A Review ofthe Literature on Equivalence Scales, by Valérie Lechene. Controversial literature abounds on modelling the effect of children on economic behaviour. This is due both to the fact that the cost of children needs to be measured in order to answer many economic questions and also that ambiguousness exists as to the field of application for the current models. The integration of socio-demographic characteristics into the microeconomic tool leads to the construction of equivalence scales, which are designed as indices of the cost of the characteristics and used to analyze demand and measure welfare. The equivalence scales, which are designed as indices of the cost of the characteristics and used to analyze demand and measure welfare. The article presents the fundamental problem of identifying scales using demand data and shows what the equivalence scales really measure. Lastly, the main models used are presented, i.e. those of Engel, Rothbarth, Barten, and Prais and Houthakker.

Development of the Cost of Children with the Household Budget: Some Results, by Jérôme Wittwer. The cost of children, such as it is perceived by traditionally estimated equivalence scales, is supposed not to be dependent on the standard of living of households (aside from via the influence of the consumption budget's structure). As this hypothesis results from neither a theoretical demand nor a given fact, this article challenges it by estimating the coefficients of scale that are functions of the household budget. These estimates are made for three demand systems in line with either the Barten approach or the Prais-Houthakker approach. The results obtained will enable an analysis to be made of the pertinence of the method used to estimate the real cost of children.

Freedom of Choice in the Time-Income Curve Context: A Quantification Test, by Jérôme Wittwer. The freedom of choice available to an agent in the time-income context appears to provide a more convincing definition of the standard of living than classic definitions. By extending a result obtained by Pattanaik and Xu, this article proposes a cardinal valuation of the freedom of choice from the point of view of the time-income curve as well as a comparison between the concentrations of income distributions and the freedom of choice.

Group Taxation: The Distorting Effects of the Tax Status Principle, by Olivier Ferrand. The tax status principle, according to which each legal entity is taxed on its own results, generates considerable tax distortions to the disadvantage of corporate groups. These distortions affect direct taxes: annual flat-rate taxation, because the amount is not proportional to turnover, and above all corporation tax, because the individual results of the companies making up the group are not offset. Indirect taxes also penalize the groups: although the withdrawal of the one-month VAT lag rule apportunely cancelled an extra tax burden that could have been nullifying, VAT still has distorting effects on the group structures in which a financial hoding company heads the subsidiaries. The fiscally distroting character of the group organization is therefore clear: might groups be a heresy from a stricly tax pont of vieuw?

The Remuneration of Corporate Heads, by Benoît Bretel, Jean-Noël Caubet-Hilloutou and Laurent Di Carlo. The main aim of the article is to answer an essential question in the debate on the neutrality of taxes and social security contributions. The issue is to find whether it is in an unincorporated enterprise's interest to form a company and, if so, whether the incentive is for the entrepreneur to be remunerated in the form of a salary or dividends. An evaluation is therefore made of the net level of remuneration that a corporate head can eventually draw from the gross profit generated by the company once he has paid all the various taxes and social security contributions due.

The Growth in Civil Service Wages as a Result of GVT : Elements of Explanation, by Hervé Bonnaz. The indicator concerning the drift in wages due to promotion, seniority and skills (GVT) is a wage indicator that shows how much a change in the job structure contributes to payroll trends. It is the sum of the internal drift in wages due to promotion, seniority and skills measures the proportion of wage growth resulting from the career advancement of officials and of a term giving the impact of inputs and outputs on the growth of the average wage. INSEE's measurements show that the drift in wages in the civil service due to promotion, seniority and skills has been rising steadily since 1980 increasing from 0.3% per year in the 1979-1984 period to a stable 1 % or so per year since 1987. The article shows that the high level observed in the GVT in the 1980s is a result of the strong upward trend in the level of skills. In the future, the level of drift in wages due to promotion, seniority and skills is expected to stabilize at its current level due to recruitment requirements for secondary school teachers, who are Category A officials.