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Impact of the ISF on the productive sector

Project Status Completed

Context

In force from 1988 to 2017, the Solidarity Tax on Wealth (ISF) was the only tax on net assets that was both progressive and based on a broad definition of wealth, including both property and movable assets. One of the recurring criticisms of this tax, which partly prompted its conversion into the Property Wealth Tax (IFI) in 2018, concerns its supposedly harmful effects on the productive sector, through a range of mechanisms such as the tax-driven emigration of entrepreneurs or the weakening of family businesses under the weight of the tax burden imposed by the ISF on family shareholders. Nevertheless, few empirical studies, either in France or abroad, have succeeded in documenting the detrimental effects attributed to taxes on net wealth.

Presentation

The project aims to estimate the effects of the ISF and its reform on the productive sector by analysing changes to the ISF over the period 2006 to 2018. To this end, it draws on a previously unpublished statistical linkage between corporate tax data and household tax data. This new dataset enables us to identify how changes in household taxation – because they affect business owners – influence firms’ decisions regarding location, investment and employment. The study has three main objectives:

The first is descriptive in nature and involves measuring, precisely and over a long period, the wealth tax (ISF) burden borne by family-owned firms via their controlling shareholders.
The second is to identify the causal effect of the wealth tax on the distribution, investment and employment decisions of family-owned firms, using the various reforms of this tax as sources of identification.
Finally, the third objective is to analyse the impact of this tax on the transfer of control and management of companies and, more generally, on the flow of capital.

Research Team

This project is led by the pole Firms.
Coordinator: Laurent Bach
Laurent Bach
Laurent Bach
Arthur Guillouzouic
Arthur Guillouzouic
Antoine Bozio
Antoine Bozio
Clément Malgouyres
Clément Malgouyres

Publication

IPP Report No. 36 (Oct. 2021) – Assessing the effects of wealth tax and its abolition on the productive sector
“Follow the money! Why dividends overreact to flat-tax reforms”, Laurent Bach, Antoine Bozio, Brice Fabre, Arthur Guillouzouic, Claire Leroy and Clément Malgouyres – working paper
IPP Interim Report (pdf – Aug 2020) – Impact of the wealth tax on the productive sector
The second interim report from the Committee for the Evaluation of Capital Tax Reforms is available on the France Stratégie website (pdf)
These publications, along with other research (including previous reports), are also available on the dedicated page at strategie.gouv.fr

Partners

Haut-commissariat à la Stratégie et au Plan

Committee for the Evaluation of Capital Tax Reforms

Last modified: July 20, 2026