RfD with Gabriel Zucman: Taxing the Rich

Joint article with Sofija Stanojevic

Gabriel Zucman at Room for Discussion

On Monday, the Room for Discussion stage hosted Gabriel Zucman, a well-renowned French economist, professor of economics at the Paris School of Economics, U.C Berkeley, and the director of the EU Tax Observatory. Dubbed as "the billionaires’ nightmare”, he is the leading expert on tax injustices and the main proponent of proposing a 2% annual wealth tax on billionaires. Zucman argues that taxing wealth rather than income represents an essential shift towards income equality, as well as providing a sustainable solution to France’s budget deficit.

Zucman opened the interview outlining how billionaires systematically avoid taxation by structuring their wealth such that there is little to no taxable income, and keeping most of their earnings in holding companies’ assets, as well as declaring income as shell companies’ earnings. Consequently, the effective tax rate for the ultra-rich is around  half of that of the rest of the population. He cites that in the Netherlands billionaires pay 17% on all taxes as opposed to the  45%  paid by the average Dutch person. This imbalance, Zucman explained, drains public budgets and shifts the fiscal burden onto the broader population, who then face longer waits for public services and lower reimbursements. In practice this means one tax code for the rich, and another for the rest.

The Zucman Tax Proposal

Zucman’s solution to this imbalance towards financial contribution is a minimum base tax for the ultra-rich, which would be levied regardless of personal circumstances or source of income. More precisely, the Zucman tax entails an annual 2% tax on households worth more than 100 million euros.  Estimated earnings from tax collection vary from €5 billion to €25 billion, with some economists being less optimistic as to the efficiency of the mechanism. Unlike the usual income tax proposals, this new method directly targets wealth in the form of assets, thus becoming substantially more effective to trace. 

Common Concerns

A concern raised during the discussion was the role of international cooperation as a crucial element of this taxing proposal. International exchange of transaction details among banks has increased substantially, thus diminishing the amount of wealth that can remain undetected for tax purposes. This increases the likelihood of transparency and thus more effective taxation. Zucman further supports his proposal by reasoning that each country can and should act independently towards more equitable taxation, being able to achieve results similar to those due to global involvement. If enough countries adopt these measures, a new global standard could be established. For instance, if a Dutch billionaire relocates to Switzerland, the Netherlands could continue taxing their wealth for 5 to 15 years based on the argument that their fortune was built using Dutch infrastructure, education, and public services. He frames this not as punishment, but as a duty to the society that made their success possible.  As for the fear of losing investments and discouraging local innovation due to stricter taxation rules, the economist enforces the idea that creativity and new developments spark from a wider share of the population than just those targeted by the wealth tax. Taking into account that many of the tools needed for effective taxation enforcement already exist, Zucman argues that political will is the missing element.

Politics

In connection with politics, Zucman and the proposed tax are often classified as “left-wing propaganda” by the far right. The economist is not part of any political entity, as his focus is turned towards academia and policy. In his view, his involvement in politics consists of defending a well-researched proposal, with the goal of allowing the final decision to be taken via democratic procedures.

On the other hand, far right French politicians argue against this taxing mechanism, by deeming it unconstitutional, as it is against the interests of the  9 billionaires behind 80%  of French broadcast channels. This is situated in contrast with the public opinion, which strongly leans towards supporting the Zucman tax. This creates tension and anticipation ahead of the upcoming elections for the French Senate, taking place in September 2026. On this account, the economist believes that democracy will prevail, as it has been proven countless times by the French people.

Takeaways

As a member of the audience, one can be left with the following idea: the Zucman tax proposal is a necessary but insufficient step towards income equality and wealth convergence. Backed up by solid research and opposed by the far right, the future of fair taxation depends on the power struggle between the democratic majority and the ultra-rich. If implemented, Zucman’s proposal could symbolize a meaningful shift of beliefs in terms of equitable contribution towards public goods and common resources. This has the potential to cause great improvements in education, public infrastructure, and state support, essentially ensuring that the state is equipped with enough resources to serve its citizens fairly.