Did Macron’s Tax Reforms Spark the Riots?

Arthur Goldhammer
4 December 2018

Here are some data relevant to the French riots. What are the effects of Macron’s tax reforms on disposable income?

If one looks only at active households, the middle-class gains are even clearer, but again the poor do not benefit:

Finally, retirees are the main losers.

This may account for the relatively large number of older people among the demonstrators (compared with similar eruptions in the past).
To me, these graphs suggest 1) that the movement may not be as widespread as it appears, and 2) that economic motives alone cannot account for the ferocity of the protest. If you’re making 1000 euros a month, a loss of 0.5% means that you’re out of pocket 5 euros. If people are starving in the provinces, as Adam Nossiter’s report in yesterday’s Times suggested, it isn’t because of Macron’s tax reforms.
Source: Financial Times
The figures are from the Institut de Politiques Publiques
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14 Comments

  • Bernard says:

    Who cares about facts. It’s all about per option. This is definitely not looking good.

  • Geof says:

    It seems clear that the fuel tax was the proximate cause of the demonstrations (which is how things started, as “demonstrations.”) That Macron was in Argentina was not his fault, but didn’t help, because it allowed hooligans to hitchhike with the Yellow Vests; that begat “riots.” But Macron is sadly tone-deaf. Bill Clinton was able to fool the American people for years with “I feel your pain.” But if there is a visual that will stick with me forever, it’s of EM inspecting the damage in Paris, shown walking beside a burned out motorbike, WEARING A SUIT of the type one would wear to a job interview.

  • MYOS says:

    I often hear the “taxe d’habitation” argument: it did help (I got €22 back, for instance), but it’s a one-time “gift” that most people I know fear will result in FEWER public services, garbage picked up less often, primary school meal costs rising, potholes going unfixed, etc., so that the “savings” will end up not being savings at all.
    And 5€ may seem little but to a person who’s making €1,000 it’s the difference between being able to buy a Kinder Surprise to her kids once so that they have the same simple pleasure, or denying them this simple pleasure of childhood. (Some Gilets Jaunes speak about having to buy Xmas gifts on credit or lay-away).
    A sociologist remarked that Gilets Jaunes are not the lower lower income – they’re working class and have a “respectable” identity, opposite the “Cassos” (cas sociaux – worst insult possible in the nearby middle school.) The crisis is one of disposable income v. constrained costs.
    I worry that the Gilets Jaunes will lead to something really bad, in part because there are no organizers (the few organizers are then promptly denounced by their base, despite attempts at transparency through Facebook Live) and in part because the government seems really tone-deaf, except, perhaps?, Marlène Schiappa who immediately asked for an examination of the Wealth Solidarity Tax* . Some are conspicuously absent, some put their foot in their mouth, and some are just unbelievable (I think it was JM Blanquer who stated yesterday that high school students support his reform. HS students have picked up on the fact there’s be fewer choices than currently so even those who are not protesting, and they are many, there’s confusion, fear, and anger about the new system. Saying this was like saying, look if you’re not protesting, we’ll take it to mean you agree).
    I’ve not heard people ask for an end to the carbon tax – this is different from the rising tax on diesel (which GJ oppose, indeed, as the spark that lit the whole firecracker).
    Now’s the time for Macron to show his intelligence, strategizing, and “en même temps” philosophy.

    *the name matters: it’s not just a wealth tax. It’s a tax that the wealthy pay in solidarity with the rest of the nation. Repealing the tax meant “we absolve you from being in solidarity with the other French people” – even if for En marche it meant “the untaxed capital should trickle down by being reinvested into the country’s economy”.

    • MYOS says:

      Apparently the “carbon tax” has now been used for shorthand for “diesel fuel price hike to make it similar to gas”, although “carbon tax” was something else originally, applied to manufacturing and factories creating carbon, not on gas.
      Gérard Darmannin has poured fuel in the fire by saying the GJ want to cut taxes so that “public expenses” can be cut too – whereas the GJ have been pretty explicit about wanting more public services in their small towns.
      Yesterday someone in government said that people from the provinces were coming on Saturday to attack and loot.
      JM Blanquer added more to his idea: not only do students support his reform, but they should be more careful about “getting hurt”. (Many kids are agressive but today there had to be parents surrounding them due to their being maimed by the police – their eye, cheek, or hand gouged out.) Apparently they received permission to cause damage, as they received permission to throw explosive grenades (the kind illegal elsewhere in Europe).
      Paris Match has, either on purpose or by mistake, put a known antisemite on its cover (he was so happy he made it known far and wide). The media are also overwhelmed and social networks are propagating the worst conspiracy theories. :s
      I am not impressed (understatement) with the way the government is handling this. I mean, at least, respond to what people are shouting, even if it’s just to buy time. Castaner is apparently totally out of his depth.

  • Robinson says:

    The core of this protest may be a minority of the population, but a large majority supports them because only about 20% of the French believe in Macron’s fiscal policy. Even centrist-bourgeois types who might favor some retrenchment to get the economy going i) don’t believe that Macron’s policies are doing that, and ii) can observe Macron’s failure to unite the nation on an ambitious new course.

    So long as the movement remains leaderless and wholly negative in its objectives, it will retain popular support from left and right. I predict it will take several more weeks to play itself out and I wouldn’t be surprised if Macron is forced to go back on the wealth tax or even ask Philippe to go.

    • Thomas Dean says:

      “but a large minority supports them …” Hasn’t a large majority supported every violent protest in France since the 1950s? I think of this protest as similar in scale, duration (thus far) to those that faced Alain Juppe – and Lionel Jospin and …

      One deeply unfortunate thing is the degree to which people justify desecration of private and public spaces, the burning, trashing, screeching of obscene tirades by saying “Well, I didn’t vote for Macron … in fact Macron failed to get more than X % of eligible voters – so he wasn’t elected anyway – the vote was illegitimate “. That way lies chaos.

      If democratic elections by secret ballot at intervals specified by the electoral law are denied the sole avenue to political power, there remains just undemocratic means. Each car set afire, each graffiti smeared on buildings, each store that must be closed for fear of vandalism, each family afraid to venture outside – are means to bring about the weakening of democratic rule.

  • annoyed says:

    I’ll admit to supporting the protests entirely. The one justification for voting Macron (in the first round) was that his neo-liberal agenda would win concessions from Germany on the action of the ECB and the structure of the Eurozone, and so help get Europe out of the impasse in which it remains stuck.

    These concessions earned nothing from Germany: Mélenchon is correct to say that Sarkozy, Hollande and Macron have all been supine, and that only threats from France will make Germany see reason, if anything will.

    The tax reforms are unjust, and even from the point of view of Macron-inclined economists (which I do not share) they are insufficient to get the economy going. Not even the extreme liberals believe that Macron’s tax laws will save the economy, and even they can see that there is no national consensus behind them.

    Also: there is simply no justification for coupling gas and diesel taxes with a cut to the wealth tax! It makes green politics look hypocritical and greedy. Ed Milliband in the UK used to talk about the squeezed middle- I don’t know how Macron et al thought they could get away with a series of tax increases on what the Brits might call the upper lower middle classes coupled with a massive tax cut for the richest. Presumably he simply despises these people, about whom he knows nothing. You don’t have to be hit very directly by one of these taxes to feel the injustice.

    I understand why the GJs want Macron to resign. While I would like this miserable quinquennat to end as soon as possible, it won’t end now. The thing to do I suppose is to hold on for a bit, then end the wealth tax cut and replace Philippe with somebody like Bayrou, who knows parts of France that Macron and Philippe do not.

    Macron probably doesn’t want to do this and will try to minimize concessions, but this strategy isn’t going to work. He isn’t DeGaulle in ’68, there is no silent majority supporting him against the protesters.

    • Tim Smyth says:

      FWIW, Most people I know in France support Macron including on the wealth tax. So while he doesn’t perhaps have the big silent majority that DeGualle he does have a political base. People like Benjamin Haddad.

  • Tim Smyth says:

    FWIW, Most people I know in France support Macron including on the wealth tax. So while he doesn’t perhaps have the big silent majority that DeGualle he does have a political base. People like Benjamin Haddad.

  • MYOS says:

    ^I’m guessing it really depends on where you live. No one I know supports the wealth tax repeal – even those who find it “symbolic only”.
    People who voted for Macron and would say “I hope he succeeds” are now really disappointed.
    I live in a small town, where 75% would qualify for “social housing”. It’s not horrible: the bus system has been extended to the peripheral smaller towns (ok, in the US we’d say “villages”), local politicians fight like heck to try and get jobs. But I wasn’t surprised at the Nutella riots. The SNCF cutting trains was deeply resented and led to protests. A one-week school trip abroad for €300 all included required almost a year of savings for local families (those who didn’t qualify for scholarships). The “emplois aidés” cancellation had a devastating effect, both on those who lost the jobs and on those who were helped by them. And one key element is that the people at the core of the “yellow vest” protests have a “respectable” identity, they’re not “assistés” or “cassos” and are working really hard not to slide into these categories but feel themselves slipping.

    At the same time, I worry about the movement and where it might lead: the lack of political background, the temptation of violence, the radical elements taking over, the far right (supremacists with celtic shields, antisemites, mercenaries) and the far left (anarchists, black block), the impossibility to negociate without spokespersons, the out of control mobs, the statements by some ministers who really don’t seem to understand what’s going on, Mr.Castaner seemingly out of his depth (excellent on spin, poor on action), the student union leader (UNL) pretty bad, the widespread belieds and wants of the GJ, the absence of traditional parties (although some on the left have tried to write down a synthesis and offer it as a basis for negociations, but the GJ refuse politicians’ mediation offer).
    Macron won’t resign. Not only would that ave not help anything but no other political party is ready to rule, in part because they are still reeling from the 2017 election that gutted them. Our best hope is a change in prime ministers and finding new ministers, with symbolic gestures and some sort of national conference involving many different groups (conferences which would have to be careful not to marginalize people whose rhetorical skills aren’t as good as those who usually participate in them.)
    At least the police seem ready for tomorrow.

    • annoyed says:

      I am Spanish (born in Bilbao) but am a citizen of France and the USA- a typical “rootless cosmopolitan” I guess, certainly not demographically typical of the protestors. I support the protests simply because I do not support the government. I do not like their fiscal policies, I think that no action at all would be better than what Macron has done, I hope that he turns back as much as he can.

      The extremism of the avant guard of the GJs worries me- they are weirdos, and I don’t like people getting hurt. But I don’t like Macron’s policies, and the majority of the French don’t either. I voted for him à contre coeur to keep Marine out, but he is an investment banker who wants to wreck our state, and I don’t blame people for doing what they can to stop him, and being angry. Benjamin Haddad seems like a bright fellow, but I don’t think that he is typical of the French person on the street. (Not that I am any more of one.)

  • Tim Smyth says:

    One thing that stunned me is that Merkel’s now annointed heir apparent AKK whom every article in Germany mentions lives 10 minutes from the French border doesn’t just live 10 minutes from the French border but lives 10 minutes from Florian Phillipot’s home constituency and base. An interesting juxtaposition AKK vs Phillipot.(The constituency is held by a backbench LREM named Christophe Arend).

    I also get the feeling a lot of hardcore German ordoliberals who oppose AKK are cursing the day Germany took back the Saarland from France(Where AKK is from). This is also the region I believe E German strongman Erick Honecker came from and Oskar Lafontaine is from.

    The issue of SNCF cuts is something I wish more was written about in the English language press. The trend in the US at least has been for rail service to expand albeit off a much much smaller base in the past 20 years. Just in my region of the US(New England) Portland, Maine regained rail service to Boston back in the early 2000 after an absence of over 40 years. It has been extremely popular across the entire political spectrum. How much is France going in the other direction?

    As an aside the Portland-Boston rail service occurs under a “separate” union contract from the main union contract the US passenger rail operator Amtrak has with it’s employees. Wonder if the SNCF union’s would go along with this type of situation on lightly used rail lines?

  • Thomas Dean says:

    Tim, I don’t think you’re right about the trend for railroad service in the U.S. With an exception for the East – where Amtrak’s always made money and the concentration of population and lesser distances make rail service economical, I ton’t think there’s been any kind of rebirth of railroads.

    For example, the high speed California tracks being built are phenomenally expensive – built entirely by state government at enormous expense – and forecast to be a disaster whenever opinion polls are taken of likely ridership. It’s mocked in all the media.

    To the extent that people want to live and work in the centers of cities – railroads will be popular and economical. If they have to make too many stops (because no one city dominates) and at distant intervals among sparse populations in those small towns, they don’t work. Fortunately for railroads in the U.S. , there has been a trend by millenials toward working in large cities – but frankly I doubt it will last when they’re older. (Remember that YUPPIE in the early 1980s stood for “young urban professional” – but the “urban” aspect of the phenomenon diminished and disappeared by the mid to late 1980s -and so did public favor for Amtrak subsidies).

    I strongly doubt that Amtrak has more routes, stops or frequent trains than ten, twenty, fifty or a hundred years ago.

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