The problem for France’s employment rate and purchasing power: Tax cuts are no longer an option

Many in France are calling for tax cuts: further reduction in production taxes (which would actually be positive for investment and employment), further reduction in corporate social contributions, reduction in household social contributions (to narrow the gap between gross and net wages). But France’s fiscal position and the need to increase much public spending actually make such tax cuts impossible. This calls for another approach: policies (education, training) to improve skills and make it possible to increase the employment rate, which is abnormally low in France. A higher employment rate would lead to higher potential GDP, higher tax revenues and also lower inequality before redistribution, which would then enable a reduction in the taxes that finance redistribution, since it is the high need for redistribution that explains the high tax burden. It is therefore first and foremost policies to lift skills that France needs to restore some fiscal leeway.