Is the Zucman tax on taxpayers with assets of more than €100 million justified? This is the question currently being debated in the French Senate.
8 points plus 1
1- The largest estates pay, in proportion to their income, lower taxes and charges (27% for billionaires) than the average citizen (50% of income). This leads to a shortfall, particularly for social security accounts, with the risk of generating financing imbalances that penalize the entire population. This observation is quite general and is not limited to France. Thus, a few years ago, the financier Warren Buffett noted that he paid less tax (in proportion to income) than his secretary.
2- The largest assets are in financial assets. Real estate is only a small part. The return on stocks (CAC 40), dividends reinvested, averaged 7% per year from 2004 to 2024 and 8.5% per year from 2014 to 2024. This return is well above the 2% rate in the proposed law. The tax would not be impoverishing.
3- The tax is based on a tax calculated on 2% of assets. If the taxpayer has already paid the equivalent of 2%, he will owe nothing more. He will only pay the difference between what he has already paid elsewhere and the amount resulting from the application of the 2%.
4- The administration has an increasingly detailed knowledge of assets, limiting the risk of circumvention.
5- The new framework bears no resemblance to the ISF (wealth tax). The number of people subject to the ISF was 358,000 in 2017, compared to an estimated 1,800 tax households in the version presented to the Senate. The current benchmark applies to assets above €100 million. In 2017, the ISF started at €1.3 million. The two measures are clearly not similar.
6- The objective of the new formula is to reduce as much as possible the exemptions which caused the ISF to lose all credit.
7- The tax revenues associated with this tax would be between 15 and 25 billion. This is substantial and would reduce the potential additional levies on other taxpayers.
8- The rate of 2% is the one that allows the reduction of the regressivity of the current tax framework without entering into the progressivity of the tax.
Among the criticisms raised is the issue of startups with very high valuations, which could penalize their shareholders whose income does not necessarily match the valuation of their company. Selling company shares to pay the new tax would carry a risk of losing control over time. The second issue is the number of people affected. In the land of startups, a compromise can be found for the few people subject to the new tax.
The observation made by numerous studies is unambiguous: a corrective mechanism must be found to make the levies more equitable.