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(Results) The impact of the 2020 Budget on households and firms

During a major conference evaluating the 2020 Budget, the IPP, co-organiser of the event with the CEPREMAP, presented its assessment of the effects of the 2020 Budget on households and firms.

Evaluation of the impacts of the 2020 Budget on households

– The 2020 budget continues to make adjustments in favour of the middle classes, through certain economic and social emergency measures.
– The reduction of income tax benefits 50% of the most comfortably-off households, with average gains of up to 1% of disposable income for households of the 75th percentile (437 euros per annum on a disposable income of 3,678 euros per month).
–The continuing decrease in property tax brings benefits to a broad middle class, from the 3rd to the 8th deciles.
– In total, the 2020 budget leads to an average increase in disposable income of 252 euros per household.

Effects of budgetary measures since the beginning of this presidential term

– Taken together, the budget measures lead to average gains of 3% for households in the 3rd to 8th deciles.
– The poorest 20% reap the smallest gains, of less than 1%.
– Gains for the richest 20% are also less than 1%, except for the highest percentile, whose disposable income rises by 2%.

Assessment of the impact of the 2020 Budget on firms

– The main budget measure for business is the reduction of the nominal corporate tax rate to 28%.
– Taking into account reductions in tax expenditures for research tax credits and sponsorship, the effective rate of the wealth tax goes down from 18% to 17.1%.
– The planned lowering of the wealth tax to 25% between now and 2022 will have the effect of increasing the differences in the effective rate of imposition between SMEs and big businesses, gaps that have recently been reduced.
– The policy of lowering the wealth tax is justified by international tax competition, but the objective of achieving the average level cannot be met if all the other countries also lower their own wealth taxes again.

Watch (or watch again) the video of this presentation

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