Why the capital gains tax will impoverish the country: “But from that our leaders are not careful, blinded that they are by their dogmatism!”

Between February 19 and March 18, 2020, following the COVVI-19 health crisis, the index increased from 6,111 points to 3,754 points (-39 %) before starting up. Moreover, Today, it is around 7,800 points, in relation to its level of 6,945 reached on September 4, 2000 a cumulative increase why capital gains tax will of only 12.31 % in almost 25 years. Meanwhile, This. Nevertheless, while at the same time inflation was approximately 58 %;

Taxing nominal capital gains, it is above all tax inflation – Why capital gains tax will

Note that, over a neutral period over the last 20 years, the CAC 40 has increased from +/- 4,000 points to +/- 7,800 points, which corresponds to a cumulative increase of +/- 95 %, an annual increase (updated) of +/- 3.3 %.

However. Meanwhile, during the same period, cumulative inflation was +/- 62 %, so that the cumulative yield, excluding inflation and excluding dividends, CAC 40 shares was only 95- 62 = 33 % in 20 years. This corresponds to real added value excluding inflation of +/- 1.14 % per year.

Ten criticisms on the new capital gains: “In 5 to 10 years. we will realize that the Pandora’s box has dangerously opened”

It follows that if we tax the nominal added value of 3.3 % at the rate (today) of 10 % at the same time that we subject the capital to a. tax on securities accounts of 0.15 %, the effective capital gain of the capital spared under the aforementioned conditions will no longer be, after a year, only 1.14-0.33-0.15 = 0.66, which already corresponds to a levy of 42.111 % of the added value excluding inflation of 1.14.

Kill the golden egg hen

But this last reasoning takes no account of the induced negative. effects which will be generated by the measure.

First of all, this is the opposite of a recovery in risk capital.

In particular. even if the tax will only be due to the capital gains made, it will create a tax latency on potential capital gains. So, it will why capital gains tax will automatically impoverish the heritage of investors and savers. This should in particular reduce inheritance tax on heritage receiving such capital gains.

In addition. this measure will constitute an obstacle to the realization of capital gains and, correlatively, a paralysis of management operations as well as loss of banking revenue and especially revenues provided in the State, in particular by the double TOB on the transfer of shares.

Understand everything about the taxation of capital gains. in 20 questions

Are we conscious for example that each transaction which will no longer be carried out due to this tax will result in the loss of 4 taxes at the rate of 0.35 % on the capital of stock market operations. the tax due 2 times (by the seller and by the buyer) on the sale price and 2 times on the re-use of the product of the sale?

Similarly. this new tax will result in an increase in management costs since it will be necessary to keep a specific accounting of each purchase operation intended to isolate the prices of each acquisition.

Who is affected by the new capital gains tax?

But from that our leaders did not care, blinded that they are by their dogmatism!

Work in perspective for the Constitutional Court

And that’s not all since heresy is such that the new legislation will not even make it possible to deduct the net balance of capital losses carried out during a previous year following. for example, to a new stock market crisis. We bet that our Constitutional Court will have to assess if it is in accordance with the constitutional principle. of equality before tax to tax capital gains without taking into account the net balance of previous losses!

What are the why capital gains tax will products targeted by the new capital gains tax?

It is far away from the time when our legislation held in a few tens of pages closely thought out. when it was based on a philosophy by providing in particular the granting of a tax credit (or a QFIE) to mitigate the double taxation of dividends!