What is France’s ‘Zucman tax’, targeting the wealthy?

France is preparing for a fight over a plan to tax the wealthy.

On the one hand, you have billionaires who remain vehemently opposed to any tax increase. On the other, you have a professor claiming the backing of Nobel Prize-winning economists.

This comes in the background of political instability in France with successive governments collapsing as President Emmanuel Macron attempts to implement unpopular austerity measures.

But what do we know about the ‘Zucman tax’ for the wealthy? Let’s take a closer look.

The ‘Zucman tax’

The proposed tax increases are named after French economist Gabriel Zucman . Zucman is a professor at the École Normale Supérieure, Paris, as well as the University of California, Berkeley. He has become famous in France after conducting a study for the G20 on the impact of a wealth tax that was backed by Brazil, France, Spain and South Africa.

Zucman has argued that billionaires should be taxed, not on their income, but on their net worth. He has said that a two per cent tax should be targeted only at those households owning over $117 million (Rs 1.03 lakh crore) in assets. He has claimed this tax, on approximately 1,800 households, could raise as much as $23 billion (Rs 20.28 lakh crore) per year.

This would be about half the savings that the austerity budget proposed by ex-PM François Bayrou before his government was ousted in a no-confidence vote. Bayrou’s predecessor Michèle Barnier met the same fate. Macron has now appointed Sébastien Lecornu as Prime Minister. France is currently grappling with a massive budget deficit which is estimated at 5.4 per cent of GDP – the biggest in Europe.

Zucman said he based this number on the increase in net worth of the wealthiest citizens of France in past decades. In 1996, for example, France’s wealthiest comprised just 6 per cent of the nation’s GDP. However, today that figure stands at 40 per cent.

Zucman also noted that billionaires, on average, pay around half the tax of a normal French citizen . Zucman and the Institute for Public Policy (IPP) estimate that centi-millionaires and billionaires pay just 0.3 per cent of their total net worth in taxes.

A study from the IPP also found that while most average people pay more taxes as their salary increases, this doesn’t hold true for the richest of the rich. While the top 0.1 per cent of earners pay around 46 per cent of their income in taxes, the wealthiest 0.0002 per cent, known as billionaires, pay only about 26.2 per cent of their income in taxes. This is because ultra-high net worth individuals use holding companies, which are taxed far less than normal income, to shield their wealth.

“Firstly, billionaires pay virtually no income tax in France, and s econdly their wealth has grown particularly rapidly over the last 15 years,” Zucman previously said.

Zucman has warned that wealth inequality could have a dire impact on France. “Unprecedented wealth concentration – and the unbridled power that comes with such wealth – has distorted our democracy and is driving societal and economic tensions,” Zucman wrote for The Guardian in June.

Zucman has said that the two per cent tax rate on their net worth would bring billionaires in line with the other classes.
“Billionaires would pay as much – but no more – than the social categories directly below them," Zucman told Le Monde in an interview.

Similar to IFI, ISF

Experts say Zucman’s two per cent tax is similar to France’s real estate wealth tax (IFI) and the former solidarity tax on wealth (ISF).

While ISF targeted real estate, cash, savings, and investments, the IFI only considers real estate. The Zucman tax, on the other hand, would include all assets. As noted before, the Zucman tax amounts to around two per cent of the net worth. Meanwhile, the IFI ranges from 0.5 per cent to 1.5 per cent of net worth.

While the Zucman tax applies to households with net worth over $117 million (Rs 1.03 lakh crore), the IFI and ISF target households that earn over $1.53 million (Rs 1,34,98,00,000). While the Zucman tax applies to around 1,800 households, the IFI targets around 186,000 households. The ISF applied to around 358,000 households.

The IFI, which replaced the ISF, generated around $2.59 billion (Rs 2.28 lakh crore) in 2024. It cost the French government around $5.30 billion (Rs 4.67 lakh crore) in revenue to do so.

While Zucman has claimed his two per cent tax could generate as much as $23 billion (Rs 20.28 lakh crore) per year, other economists are not so optimistic. They say it could ultimately generate around $5.89 billion (Rs 5,19,30,00,000) in revenue, taking into account the fact that billionaires could restructure their taxes or simply leave. However, Zucman has argued that very few billionaires would actually take steps to do so. A study by the French government’s Council of Economic Analysis backed him up, saying a maximum of just 0.03 per cent of billionaires would choose to ultimately leave.

Regardless of the debate, the proposed tax remains widely popular among the French public. A French Institute of Public Opinion (Ifop) study revealed that 86 per cent of respondents backed the proposal, including 92 per cent from President Emmanuel Macron’s Renaissance Party.

‘Destroy French economy’

France’s ultra-rich are not happy. Bernard Arnault, Europe’s wealthiest man, has warned that this two per cent tax could destroy the French economy.

Arnault, whose net worth is approximately $169 billion (Rs 148.95 lakh crore), claimed that the proposed move “aims to destroy the liberal economy, the only one that works for the good of all”.

“This is clearly not a technical or economic debate, but rather a clearly stated desire to destroy the French economy,” Arnault’s statement said. “I cannot believe that the French political forces that govern or have governed the country in the past could lend any credibility to this offensive, which is deadly for our economy.”

Zucman hit back at Arnault:.

“We can have fundamental disagreements, and Arnault is entitled, like all citizens, to his opinions. But this debate must take place with respect for the truth and the facts,” he said.

The political situation in France

The French political situation is one of turmoil and chaos. Lecornu is France’s fifth prime minister in less than two years. The Macron loyalist, keeping in mind the fate of his predecessors, is under pressure to send a budget to lawmakers by 7 October.

The Socialists, who are supporting the coalition government, are demanding the two per cent wealth tax in the 2026 budget. However, this would alienate Lecornu’s right-wing opponents.

In parliament, the proposal has broad support on the left, which managed to pass it in the lower house in February before the Senate rejected it. The proposal now stands a stronger chance in the 2026 budget, as Lecornu cannot afford to alienate the Socialists. They could topple him by joining forces with other parties in a no-confidence motion.

Lecornu has said he is open to discussion but is concerned that including business owners’ assets, as opposed to only real estate and financial assets, could penalise job creators.

After his 2017 election, President Emmanuel Macron refocused that tax from general wealth — previously up to 1.5 per cent on assets above $1.53 million (Rs 1.14 crore) — to now cover only real estate, earning him lasting criticism as “president of the rich”.

However, legal experts say the tax could face constitutional hurdles, citing jurisprudence against “confiscatory” measures and taxes that single out specific groups.

Zucman counters that the status quo violates the 1789 Declaration of the Rights of Man and of the Citizen, which states tax must be borne equally in proportion to ability to pay. The Zucman tax would not make the ultra-rich pay more than others, he said, but ensure they do not pay less.

“Therefore, it is a simple matter of bringing our tax laws into line with the fundamental constitutional principle of equality before taxation,” he said.

It seems the debate on the Zucman tax is set to continue in France.

With inputs from agencies