France's Zucman tax: Will taxing the ultra rich really help to balance the budget?

It's a taxable that has caused a operation successful French politics: nan alleged Zucman tax.

The connection involves levying a minimum 2% taxation connected apical of regular income taxation connected individuals who person assets of much than €100 million. In France, this caller taxation complaint would use to astir 1,800 people.

For its supporters, this thought represents taxation justness astatine a clip erstwhile European personnel states are being called connected to walk much connected information and defence.

Giulia Varaschin, argumentation advisor astatine nan EU Tax Observatory, points retired that it is not only "a very celebrated measure" pinch nan public, but besides "across nan governmental landscape."

An advantage of nan proposal, according to Varaschin, is that it "addresses a problem, namely that nan ultra-rich salary little tax."

The Zucman taxation is nan brainchild of French economist Gabriel Zucman, who has advocated for a world minimum wealthiness taxation to reside nan debased taxation load connected nan ultra-rich.

He proposes to correct a shape of taxation inequality successful which nan wealthiest salary little taxation than nan remainder of nan population.

But opponents of nan thought opportunity nan caller taxation would effect much group than conscionable nan ultra-wealthy.

"It won't conscionable impact billionaires. We request to beryllium alert that this taxation will besides impact entrepreneurs who person developed their businesses and family businesses," says Mikael Petitjean, main economist astatine Waterloo Asset Management and professor astatine nan Catholic University of Louvain.

One consequence could beryllium companies reducing their investments.

"Over nan past 30 years, nan 500 richest group successful France person grown from 6% of nan nationalist GDP to 42% today," said Giulia Varaschin.

Replenishing nan coffers without fund cuts

According to Zucman, his measurement would make it imaginable to dress up portion of nan French shortage without making heavy fund cuts. The Zucman taxation could bring successful astir €20 cardinal for nan French government.

"Basically, erstwhile we talk astir uncovering money to capable nan budget, we tin either trim nationalist spending, which would mean cutting societal assistance, pensions and healthcare, aliases cod much money, peculiarly from group who don't already salary any," summarises Varaschin.

The cumulative effect astatine EU level would beryllium moreover greater, since it is estimated that specified a taxation would bring successful €67 cardinal for Member States.

But Petitjean says nan figures don't adhd up.

"I don't deliberation we'll travel up pinch €20 billion. Some estimates are much for illustration €5 billion, but I moreover wonder. I deliberation it's moreover imaginable that it won't make immoderate money astatine all," he told Euronews.

"There is simply a move of behavioural accommodation that is often very overmuch underestimated by economists, which intends that group don't fto themselves beryllium taken advantage of. Strategies are utilized to effort and debar this tax," Petitjean said.

An further taxation besides raises nan threat of a taxation exodus by nan ultra-rich but this statement has been rejected by nan European Tax Observatory.

"The information we person connected superior formation pursuing taxation increases, successful different words nan truth that rich | group time off their state aft a taxation rise, shows that taxation exile is very, very marginal. And according to each nan information we have, it has ever had a negligible economical effect," Varaschin explains.

Which European countries taxation their wealthy?

Out of European Union personnel states, only Spain has applied a solidarity taxation connected ample fortunes for nan past 3 years. This levy applies to nett wealthiness of €3 cardinal aliases more.

The country's finance ministry says nan measure, which was primitively intended only for nan 2022 and 2023 taxation years, has had a "beneficial effect."

However, nan thought of making nan able taxpayers salary much is causing a operation successful different European countries. Norway, which is not portion of nan EU, has a wealthiness taxation of 1.1% connected assets successful excess of €1.7 million. The Labour Party, which won nan wide predetermination earlier this month, has pledged to support this system.

In Switzerland, wealthiness is taxed, but nan percent varies from authorities to state. A governmental statement is presently underway connected really overmuch nan state should taxation inheritance, pinch a connection suggesting to use levy connected inheritances successful excess of €53 cardinal (50 cardinal Swiss francs) astatine 50%, pinch nan purpose of financing nan ambiance transition.

Petitjean does, however, suffice these past 2 examples.

"Switzerland and Norway are 2 very rich | countries pinch a batch of capital. In Norway, you know, you person a colossal sovereign wealthiness fund, and successful truth they person a spot of an embarrassment of riches successful Norway, and successful Switzerland too", he explains.

Other personnel states taxation very precocious incomes, but connected circumstantial assets.

In France, wealthiness taxation has not existed since 2018 but has been replaced by a taxation connected existent property wealth. This only applies to spot assets pinch a nett worth successful excess of €1.3 million.

Until 2001, nan Netherlands had a wealthiness tax. Currently, a 36% taxation is applied to "notional returns" connected assets. The strategy covers 2nd homes, savings and shares.

In Belgium, a solidarity publication is levied connected definite securities.

In nan United Kingdom, a statement is nether measurement connected nan taxation of nan ultra-rich whose assets transcend £10 cardinal (€11 million).

The proposal, championed by NGOs, Labour Party officials and French economist Thomas Pikkety, envisages a 2% taxation connected these very able individuals. The guidance Conservative Party is opposed to nan measure.