The question of how best to tax wealth has long been posed. In a recent pamphlet the French economist Gabriel Zucman both analyses the extent and depth of wealth inequality in France (and elsewhere) using the best data as yet available, and details what he regards as the optimum way of tackling this issue. His focus is on billionaires who, deploying a series of devices, he contends currently pay tax at the rate of 13 per cent. It is the purpose of this blog to offer a summary of his counsel on how best to right this manifest wrong. I’m skipping his detailed account of how wealth and taxation are presently handled in France and elsewhere, and of the rank injustice involved.
He proposes a minimum tax on ultra-high net worth individuals based on their wealth. He writes:
‘I recommend a minimum annual tax of 2 per cent of wealth for ultra-high net worth individuals: those worth $100 million or more. According to my estimates, an instrument of this kind could bring in between $300 billion and $380 billion per year in tax revenue world-wide, including 67 billion euros in additional tax revenue for Europe.’
It was a proposal adopted by the National Assembly in France in 2025, but rejected by the Senate a few months later.
‘Despite the very small number of households concerned (about 1,800 in France), the expected tax revenue would be somewhere between 15 billion and 25 billion euros a year.’
Zucman’s mechanism would only apply if the amount of personal tax already paid is less than 2 per cent of an individual’s total wealth. The individuals concerned would have to pay the difference to reach the minimum threshold of 2 per cent. It would impact only those who currently contribute very little to the funding of public goods and services.
The figure of 2 per cent is the rate that would effectively address the regressive features of current tax systems:
‘On average billionaires earn a 6 per cent return on their wealth each year. A 2 per cent tax on their wealth would, on average, be similar to a tax of 33 per cent (two divided by six) on their income, typically what the rich (but not the super-rich) already pay. Therefore my proposed tax would simply close the gap between the fundamental principle of tax equality and our current tax laws.’
Nor is Zucman’s wealth threshold of 100 million euros random:
‘it is the level beyond which the tax system becomes regressive. Taxpayers with wealth below 100 million euros often (though not always) pay substantial individual income tax. Those above 100 million euros do not, especially the billionaires who pay so little. More than 80 per cent of the tax revenue raised by the 2 per cent minimum tax I propose would be paid by billionaires – the people at the pinnacle of wealth distribution, where wealth is hoarded and taxable income vanishes.’
Would it work? Zucman thinks so. It would effectively close the door ‘on all tax avoidance strategies, from holding companies and trusts to shell companies.’ Currently corporate taxes are virtually the only taxes billionaires pay, but it is too blunt an instrument. Ultra-high net worth individuals often relocate to foreign tax havens, another issue that needs to be addressed:
‘Ultra-high net worth individuals should continue to pay the minimum tax, perhaps not until they die (as in the US), but for at least five or ten years after leaving the country where their fortune was established.’
He adds:
‘if an individual has made it into the billionaire club, it is fairly obvious that this is largely thanks to the education and health care they received, the public good and services that have allowed their businesses to prosper and the governmental expenditure that has kept their property secure.’
Zucman is up front about the fact that old wealth taxes have suffered from rampant evasion. Bank secrecy was commonplace, as was hiding assets in offshore banks. In 2018 however the automatic exchange of banking information was agreed. ‘This could easily be used by tax authorities to generate prepopulated wealth tax returns.’ Many countries already use this for individual income tax returns.
‘So with no loopholes, no incentives to flee to tax havens and more effective means of repressing fraud, it would be virtually impossible for the super-rich to avoid the proposed minimum tax.’
There would of course be fierce opposition to the introduction of such a tax, as there was when income tax was first introduced.
Reference
Zucman,G (2026) We Need to Tax Billionaires. London; Basic Books.