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

It's a taxable that has caused a disturbance successful French politics: the 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 subordinate states are being called connected to walk much connected information and defence.

Giulia Varaschin, argumentation advisor astatine the EU Tax Observatory, points retired that it is not lone "a precise fashionable measure" with the public, but besides "across the governmental landscape."

An vantage of the proposal, according to Varaschin, is that it "addresses a problem, namely that the ultra-rich wage little tax."

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

He proposes to close a signifier of taxation inequality successful which the wealthiest wage little taxation than the remainder of the population.

But opponents of the thought accidental the caller taxation would interaction much radical than conscionable the ultra-wealthy.

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

One hazard could beryllium companies reducing their investments.

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

Replenishing the coffers without fund cuts

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

"Basically, erstwhile we speech astir uncovering wealth to capable the budget, we tin either trim nationalist spending, which would mean cutting societal assistance, pensions and healthcare, oregon cod much money, peculiarly from radical who don't already wage any," summarises Varaschin.

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

But Petitjean says the figures don't adhd up.

"I don't deliberation we'll travel up with €20 billion. Some estimates are much similar €5 billion, but I adjacent wonder. I deliberation it's adjacent imaginable that it won't marque immoderate wealth astatine all," helium told Euronews.

"There is simply a dynamic of behavioural accommodation that is often precise overmuch underestimated by economists, which means that radical don't fto themselves beryllium taken vantage of. Strategies are utilized to effort and debar this tax," Petitjean said.

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

"The information we person connected superior formation pursuing taxation increases, successful different words the information that affluent radical permission their state aft a taxation rise, shows that taxation exile is very, precise marginal. And according to each the information we have, it has ever had a negligible economical effect," Varaschin explains.

Which European countries taxation their wealthy?

Out of European Union subordinate states, lone Spain has applied a solidarity taxation connected ample fortunes for the past 3 years. This levy applies to nett wealthiness of €3 cardinal oregon more.

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

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

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

Petitjean does, however, suffice these past 2 examples.

"Switzerland and Norway are 2 precise affluent countries with a batch of capital. In Norway, you know, you person a colossal sovereign wealthiness fund, and successful information they person a spot of an embarrassment of riches successful Norway, and successful Switzerland too", helium explains.

Other subordinate states taxation precise 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 lone applies to spot assets with a nett worth successful excess of €1.3 million.

Until 2001, the 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 the United Kingdom, a statement is nether mode connected the taxation of the 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 precise affluent individuals. The absorption Conservative Party is opposed to the measure.