TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, September 17, 2018

Guillot Presents Who Paid The 75% Tax On Millionaires? Today At UC-Berkeley

GuillotMalka Guillot (Ph.D. 2018, Paris School of Economics) presents Who Paid the 75% Tax on Millionaires? Optimization of Salary Incomes and Incidence in France at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

Using several administrative datasets, I study the impact of temporary tax on top wage income earners, implemented for 2013 and 2014 only and known as the "75% tax above 1m euro''. The tax is nominally paid by the firms. The tax base is gross annual salary income above one million euros and the top marginal tax rate on wage earners increased from 64% to 74% because of the tax. About 400 employers paid the tax each year and about 1000 employees were concerned. I document that the tax was largely borne by employers, who paid 80% of the tax.

Taking advantage of the short term nature of the tax, I show that the tax triggered important optimization response of wage earners, taking the form of time-shifting. I do not see any income-shifting nor any migration response. I study the elasticity of the pre-tax labour income to the net-of-tax rate (1 minus the marginal tax rate) and find an elasticity of $0.3$, that I interpret as pure optimization. The firms were also affected by the tax through a decrease in the total number of employees and demonstrate some evidence of optimization behaviour.

Guillot Chart

Antoine Ferey (Ph.D. Candidate,  CREST, Ecole Polytechnique) is presenting Optimal Taxation and Tax Complexity With Misperceptions

Colloquia, Scholarship, Tax | Permalink


We all know that corporations don’t really bear the economic incidence of any tax, but instead taxes, like all costs, are borne by some combination of employees, shareholders and consumers. I suppose all this study really tells us is that the tax did not really serve to depress high end wages but was treated by corporations like other taxes. If so (unless I’m misunderstanding something, which is quite possible), then this would seem to be a rather silly tax

Posted by: Mike Petrik | Sep 17, 2018 12:24:24 PM