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Disinterested, philanthropy? A note published Tuesday, March 14 by the Institute of Public Policy (IPP) questions this evidence. By looking at the behavior of the wealthiest in France, economists Julia Cagé (president of the Society of readers of the World) and Malka Guillot sought to measure the effect on donations of the reform of the wealth tax (ISF), transformed into a tax on real estate wealth (IFI) at the end of 2017. The richest 1% are indeed overrepresented in the population of donors, without their contribution having previously been the subject of dedicated work. Conclusion: their donations do not only have a charitable ambition, they also serve political objectives.
The subject has a significant budgetary dimension because donations are tax deductible for individuals and companies alike. The total amount of philanthropic donations in France reached 8.5 billion euros in 2019, of which a third came from individual donors. However, 66% of sums given to charitable or political organizations can be deducted from income tax, while charitable donations are deductible at 75% from the ISF and the IFI – political donations are not not deductible from this tax. It was the TEPA law (work, employment and purchasing power), passed under Nicolas Sarkozy in 2007, which introduced the possibility of deducting 75% of charitable donations from wealth tax (capped at 50,000 euros).
The 2017 ISF reform, which reduced the number of taxpayers by two-thirds by removing financial assets from its base, mechanically restricted the benefit of this tax advantage. For people who have opted out of this tax, donating money to charities now costs more – the cost increases from 25% to 34% of the amount donated, while the cost of a political donation does not change. not.
The right benefits the most
The study shows that the more the cost of charitable donations increases, the more they decrease, and the more political donations increase. The abolition of the ISF, which reduced the average amount of tax by 10,820 euros for those who remain subject to it and by 7,702 euros for those who have left it, has resulted in a drop in charitable donations, as feared by the associative world at the time. At the same time, the authors observe a “sharp increase in political contributions” for taxpayers outside the tax field. At equal cost, the latter are more willing to choose to give to political organizations. Between 2016 and 2017, charitable donations under the ISF fell by 267 million euros. “This decrease would correspond to an increase of 758,117 euros for political contributions”, calculates the note from tax data. An order of magnitude close to the total of donations to the Socialist Party (PS) that year (nearly 600,000 euros).
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