cawacko
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There are people who want this in America.
On the surface the idea of taking from the very rich has obvious appeal. But as always, the devil is in the details. Will it drive out investment, fall short of revenue promises, and end up hurting the economy? History suggests that’s what will happen. In fact France had a wealth tax for decades and scrapped it in 2017 because it was driving out investment. Interesting that they now want to bring it back.
France’s slide into political and fiscal dysfunction is generating a groundswell of support for a sweeping wealth tax that would represent a radical break from the pro-business agenda of President Emmanuel Macron.
The proposal is the work of French economist Gabriel Zucman, a former adviser to U.S. Sens. Bernie Sanders and Elizabeth Warren. He wants to impose a 2% tax on the assets of people with net wealth of 100 million euros, equivalent to $118 million, or more.
Macron and his center-right allies have long dismissed the idea of a wealth tax as a “soak-the-rich” relic of France’s socialist past. France’s business leaders have objected to Zucman’s proposal, including Bernard Arnault, the chief executive of French luxury giant LVMH, who said it would be “deadly for our economy.” Some economists say the tax could hurt investment and economic growth.
With Macron’s government scrounging for billions in cost-savings to rein in its budget deficit, however, Zucman has seized the moment to demand a contribution from France’s billionaires and centimillionaires as a matter of “fiscal justice.”
Much of the country backs the economist. A recent Ifop poll shows that 86% of respondents support the Zucman tax, including 75% of voters for Marine Le Pen’s far-right National Rally party and 92% of Macron’s supporters.
The strong public support is notable in a country where voters agree on little else. The National Assembly is deeply fractured between Macron’s ranks—who typically oppose any tax increases—and lawmakers on the far-right and far-left who want to maintain or even expand public spending levels. The gridlock has depleted France’s finances, driving up its borrowing costs and transforming every budget vote into a referendum on the government.
Instead of narrowing France’s fiscal hole with the €44 billion in public spending cuts—equivalent to about $52 billion—pushed by François Bayrou, the prime minister who lost his job in a recent parliamentary vote, Zucman says it is high time the taxman reached into the pocket of some of the country’s wealthiest citizens. He estimates his proposal could raise €20 billion annually, although some economists say it wouldn’t raise nearly that much.
“It will be very difficult to ask people to make any kind of sacrifice as long as billionaires pay so little tax,” Zucman said in an interview.
Suddenly, there is talk of “fiscal justice” everywhere. The governor of the Bank of France recently said “some measures of anti-fiscal optimization on big fortunes would be justified. For the belt-tightening to feel acceptable it has to feel just.”
When a half-million protesters poured onto city streets across France last week, many carried placards that read: “Yes to the Zucman tax: billionaires pay up.”
Sébastien Lecornu, the new prime minister and a close Macron ally, is counting on support from a group of Socialist lawmakers, to pass a budget by the end of the year. At the top of the lawmakers’ list of demands is the Zucman tax.
Zucman, a fresh-faced 38-year-old, aims to push his movement far beyond French shores. Last year, he presented a technical document on his tax at the Group of 20 Nations summit in Rio de Janeiro.
“I think that if France adopts it, we would greatly increase our chances of it becoming European fairly quickly and, ultimately, global,” Zucman said.
Zucman says France’s wealthiest are paying far less in taxes as a percentage of their income than regular wage earners. France tends to tax income from labor more heavily than dividends and other income earned from assets. The Paris-based Institute of Public Policies says the richest 0.0002% in France pay an effective tax rate of 26%, compared with 46% for the richest 0.1% of households.
Under Zucman’s new plan, France’s four wealthiest families would pay around €9 billion in taxes, economists say.
“This is clearly not a technical or economic debate, but rather a clearly stated desire to destroy the French economy,” Arnault, the LVMH chief executive and one of the world’s wealthiest men, said in a statement.
A recent report by the French Senate, where conservatives are in the majority, said the current tax structure was concentrating wealth among France’s richest households. In 1996, France’s 500 wealthiest families accounted for 6% of gross domestic product. In 2024, they accounted for 42% of GDP, according to French magazine Challenges.
Opponents to Zucman’s proposals are lining up in France’s tech industry, where startups valued in the billions-of-euros generate limited revenue. That makes it hard for founders to foot a souped-up tax bill.
“I wouldn’t be able to pay it, obviously,” said Arthur Mensch, the chief executive of Mistral, Europe’s leading AI developer, when a TV interviewer asked him about paying €24 million in annual taxes under Zucman’s proposal.
Last week Zucman dropped in on a tech conference in Paris, where he debated tech founders as well as Philippe Aghion, a prominent economist at the Collège de France.
“You’re going to turn France into a tax prison,” Aghion told Zucman.
Yahya Fallah, founder of the AI startup OpenAleph, said Zucman faced “a philosophical and cultural battle.”
“We are determined to make sure this doesn’t go through,” he said.
Collecting any wealth tax could prove challenging. Wealthy French have a history of winning exemptions when previous governments have attempted to target them.
In 1981, France introduced a wealth tax, which applied a levy of up to 1.25% on the assets of the wealthiest households. That threshold was set at households with a net wealth of €1.3 million or more when Macron abolished it in 2017. The wealthy responded by placing their assets in holding companies that categorized their assets as exempt because they were “work-related.”
Macron was swiftly branded “president of the rich” after he abolished the previous wealth tax. His government has so far rejected Zucman’s new tax but is now saying France’s wealthiest families should contribute more to help fix France’s budget deficit.
“There’s this question of fiscal justice, of sharing the burden. We must work on this,” Lecornu told a French newspaper. “But be careful with work-related assets, because that creates jobs and economic growth.”
On the surface the idea of taking from the very rich has obvious appeal. But as always, the devil is in the details. Will it drive out investment, fall short of revenue promises, and end up hurting the economy? History suggests that’s what will happen. In fact France had a wealth tax for decades and scrapped it in 2017 because it was driving out investment. Interesting that they now want to bring it back.
Wealth Tax Stages Comeback in France
Economist’s proposal to adopt a hefty wealth tax has strong support in poll as public finances deteriorate
France’s slide into political and fiscal dysfunction is generating a groundswell of support for a sweeping wealth tax that would represent a radical break from the pro-business agenda of President Emmanuel Macron.
The proposal is the work of French economist Gabriel Zucman, a former adviser to U.S. Sens. Bernie Sanders and Elizabeth Warren. He wants to impose a 2% tax on the assets of people with net wealth of 100 million euros, equivalent to $118 million, or more.
Macron and his center-right allies have long dismissed the idea of a wealth tax as a “soak-the-rich” relic of France’s socialist past. France’s business leaders have objected to Zucman’s proposal, including Bernard Arnault, the chief executive of French luxury giant LVMH, who said it would be “deadly for our economy.” Some economists say the tax could hurt investment and economic growth.
With Macron’s government scrounging for billions in cost-savings to rein in its budget deficit, however, Zucman has seized the moment to demand a contribution from France’s billionaires and centimillionaires as a matter of “fiscal justice.”
Much of the country backs the economist. A recent Ifop poll shows that 86% of respondents support the Zucman tax, including 75% of voters for Marine Le Pen’s far-right National Rally party and 92% of Macron’s supporters.
The strong public support is notable in a country where voters agree on little else. The National Assembly is deeply fractured between Macron’s ranks—who typically oppose any tax increases—and lawmakers on the far-right and far-left who want to maintain or even expand public spending levels. The gridlock has depleted France’s finances, driving up its borrowing costs and transforming every budget vote into a referendum on the government.
Instead of narrowing France’s fiscal hole with the €44 billion in public spending cuts—equivalent to about $52 billion—pushed by François Bayrou, the prime minister who lost his job in a recent parliamentary vote, Zucman says it is high time the taxman reached into the pocket of some of the country’s wealthiest citizens. He estimates his proposal could raise €20 billion annually, although some economists say it wouldn’t raise nearly that much.
“It will be very difficult to ask people to make any kind of sacrifice as long as billionaires pay so little tax,” Zucman said in an interview.
Suddenly, there is talk of “fiscal justice” everywhere. The governor of the Bank of France recently said “some measures of anti-fiscal optimization on big fortunes would be justified. For the belt-tightening to feel acceptable it has to feel just.”
When a half-million protesters poured onto city streets across France last week, many carried placards that read: “Yes to the Zucman tax: billionaires pay up.”
Sébastien Lecornu, the new prime minister and a close Macron ally, is counting on support from a group of Socialist lawmakers, to pass a budget by the end of the year. At the top of the lawmakers’ list of demands is the Zucman tax.
Zucman, a fresh-faced 38-year-old, aims to push his movement far beyond French shores. Last year, he presented a technical document on his tax at the Group of 20 Nations summit in Rio de Janeiro.
“I think that if France adopts it, we would greatly increase our chances of it becoming European fairly quickly and, ultimately, global,” Zucman said.
Zucman says France’s wealthiest are paying far less in taxes as a percentage of their income than regular wage earners. France tends to tax income from labor more heavily than dividends and other income earned from assets. The Paris-based Institute of Public Policies says the richest 0.0002% in France pay an effective tax rate of 26%, compared with 46% for the richest 0.1% of households.
Under Zucman’s new plan, France’s four wealthiest families would pay around €9 billion in taxes, economists say.
“This is clearly not a technical or economic debate, but rather a clearly stated desire to destroy the French economy,” Arnault, the LVMH chief executive and one of the world’s wealthiest men, said in a statement.
A recent report by the French Senate, where conservatives are in the majority, said the current tax structure was concentrating wealth among France’s richest households. In 1996, France’s 500 wealthiest families accounted for 6% of gross domestic product. In 2024, they accounted for 42% of GDP, according to French magazine Challenges.
Opponents to Zucman’s proposals are lining up in France’s tech industry, where startups valued in the billions-of-euros generate limited revenue. That makes it hard for founders to foot a souped-up tax bill.
“I wouldn’t be able to pay it, obviously,” said Arthur Mensch, the chief executive of Mistral, Europe’s leading AI developer, when a TV interviewer asked him about paying €24 million in annual taxes under Zucman’s proposal.
Last week Zucman dropped in on a tech conference in Paris, where he debated tech founders as well as Philippe Aghion, a prominent economist at the Collège de France.
“You’re going to turn France into a tax prison,” Aghion told Zucman.
Yahya Fallah, founder of the AI startup OpenAleph, said Zucman faced “a philosophical and cultural battle.”
“We are determined to make sure this doesn’t go through,” he said.
Collecting any wealth tax could prove challenging. Wealthy French have a history of winning exemptions when previous governments have attempted to target them.
In 1981, France introduced a wealth tax, which applied a levy of up to 1.25% on the assets of the wealthiest households. That threshold was set at households with a net wealth of €1.3 million or more when Macron abolished it in 2017. The wealthy responded by placing their assets in holding companies that categorized their assets as exempt because they were “work-related.”
Macron was swiftly branded “president of the rich” after he abolished the previous wealth tax. His government has so far rejected Zucman’s new tax but is now saying France’s wealthiest families should contribute more to help fix France’s budget deficit.
“There’s this question of fiscal justice, of sharing the burden. We must work on this,” Lecornu told a French newspaper. “But be careful with work-related assets, because that creates jobs and economic growth.”
