Taxes for or against production.

Summary France is characterized by a high number and level of taxes on production. These can be particularly harmful because of the distortions they create throughout the production chain: they directly affect firms' decisions in terms of choice of production methods and prices and can therefore penalize their productivity and competitiveness. In addition, they increase the break-even point of firms and may explain, along with other factors, the relative atrophy of the French productive sector. In this new CAE Note, Philippe Martin and Alain Trannoy examine three of the most important taxes on production and recommend, based on empirical work, that priority be given to eliminating the C3S, whose harmfulness is unparalleled in our tax system, and then to attacking the CVAE. This strategy of reforming and simplifying corporate taxation could be accompanied, if the financial margins are not sufficient, by measures aimed at obtaining less harmful substitute public revenues.