France: What is known about taxation must be taken into account

Before implementing a tax reform in France, the known effects of different taxes must be taken into account: The correlation between the weight of companies’ social contributions and the employment rate is impressive; it is also well known that this correlation is higher for low and medium wages; When the marginal taxation of capital income is very high (which was the case in France before the "Macron reform"), residents are discouraged from holding financial assets; When companies’ social contributions are lowered and VAT is increased by the same amount, this combination is equivalent to a devaluation (a "fiscal devaluation"); the often-mentioned proposal to cut the VAT rate may therefore lead to an appreciation of the "franc".