Executive “Act II” starts with a big number: 5 billion euros. This is the amount of the future massive cut in income taxes. This boost was announced Wednesday, June 12 by Edouard Philippe, during his general policy speech to the National Assembly. As promised, the active middle classes are the big winners of the measure.
The Prime Minister thus announced an average gain of 350 euros for the 12 million households not exceeding the first tax bracket. And, for the 5 million households of the following tranche, it will reach 180 euros. The executive insists: there will be no losers from this reform. But the wealthiest households will gain almost nothing. When we look in detail at the concrete cases provided by Bercy, we realize that it is, in fact, the upper middle classes who are the most advantaged.
33% less tax for some singles
Imagine a single person without children. If he earns 1,500 euros monthly, his IR will drop by 39 euros. That is 14.7% savings compared to its old tax. If he touches 2,000 euros, however, it’s the jackpot. His annual gain will reach 541 euros (-33.2% of his IR). And finally, at 3,000 euros per month, its economy will be relatively much smaller. Only 125 euros, a decrease of 3.2% of its IR.
Same story for the couple with two children. For 4,000 euros of declared income per month, the IR will drop by 181 euros (-17.5%).