central figure<\/a> in France’s recent fiscal reform debates and a leading voice advising European policymakers on wealth taxation, Zucman has increasingly focused on how these economic principles apply globally. Berkeley Social Sciences spoke with Zucman about how his proposed tax would work in practice, and what its adoption could mean for the future of democracy and inequality. This interview has been edited for length and clarity.<\/p>\nWhat makes studying how the ultra-rich are taxed an important lens for understanding inequality?
Gabriel Zucman:\u00a0The rise in extreme wealth has been perhaps the most striking development in the U.S. and world economy over the last decades. In the early 1980s, the 400 wealthiest Americans owned in wealth the equivalent of 2% of U.S. Gross Domestic Product (GDP); now they own more than 20%. With the upsurge of their wealth has come an explosion of their power, including the power to buy elections, influence policymaking, shape the prevailing ideology through the media they own and tilt markets by buying competitors.\u00a0<\/p>\n
Of course the rise of inequality is a broader phenomenon; it\u2019s not just the billionaires who have seen their wealth explode. But when it comes to the importance for democracy and society at large, the rise of extreme wealth has been particularly consequential. In the 2000 federal election cycle, billionaires (around 0.0005% of the US population) accounted for 1% of total campaign spending, in 2024 they accounted for 19% \u2014 and 33% of all donations to the Trump campaign. Everything that is downstream of the political system \u2014 including the courts, regulatory power, economic policy, media independence and so on \u2014 is affected by the surge of billionaire influence.<\/p>\n
Can you share more about how your 2% “Zucman tax” would work in practice, and why it’s a more effective solution than existing approaches?
Gabriel Zucman:\u00a0This proposal was born out of the analysis of the history of wealth taxation (especially in Europe), which by and large was a failure. There are two ways to look at that failure: one can say \u201cwealth taxes have been tried in the past, they failed, hence they will always fail.\u201d Or one can try to understand the mistakes that were made, and think about how they could be addressed. This is the approach I\u2019ve followed.<\/p>\n
Past wealth taxes in Europe largely exempted the super-rich because they did not tax large shareholding, or when they did, they taxed them for only a fraction of their true value. My proposal takes the opposite approach: it is squarely focused on the ultra-wealthy (those with more than $100 million in wealth), but with no loophole of exemption. Fundamentally, it creates a new principle: that extreme wealth has to come with unavoidable duties toward society. It seems obvious that there should be a minimum amount of personal tax owed when you\u2019re rich, yet this principle does not exist in our laws today.\u00a0<\/p>\n
This minimum, to be effective, must be expressed as a fraction not of income \u2014 which is easy to manipulate \u2014 but of wealth. Hence the proposal for a minimum tax on the super-rich equal to 2% of their wealth. Someone who would already pay the equivalent of 2% or more of their wealth in personal tax would have nothing more to pay, but a billionaire who pays less than 2% would have to pay the difference to reach the 2% minimum.\u00a0<\/p>\n
Why do you think now is the right moment politically and economically to implement a tax on billionaires?
Gabriel Zucman:\u00a0There is always a tension in democratic societies between the concentration of wealth and the very possibility of a well-functioning democracy. Wealth concentration corrodes democracy. All the thinkers of democracy, from Aristotle to the Founding Fathers to contemporary scholars like Albanian scholar Lea Ypi, have highlighted this fundamental issue. But from the post-World War II era to the beginning of the 21st century, it seemed for a brief period of time that this issue belonged to the past: extreme wealth seemed to have disappeared, wealth concentration was at a historically low-water mark. Today it\u2019s back, and the fight between oligarchy and democracy is shaping up to be the defining battle of the 21st century.<\/p>\n
If the Zucman tax were adopted, what would its success look like in five to 10 years?
Gabriel Zucman:\u00a0First, if done well, it would generate a lot of tax revenue \u2014 more than $400 billion in global tax revenue annually, about 0.4% of world GDP. This is more than all the money currently spent on international organizations and international development aid.\u00a0<\/p>\n
Second, I hope it would encourage countries to create more progressive wealth taxes. I view the 2% minimum wealth tax as an irreducible floor, but certainly not a ceiling. Two percent is the rate that would ensure that billionaires would pay as much tax \u2014 all taxes included \u2014 as the middle class, relative to their income. Favoring less than 2% would mean accepting that billionaires have a \u201cright\u201d to pay less than the rest of the population; this violates our most fundamental principles of equality before the law. Indeed, polls show that more than 80% of the population agrees that billionaires should not be allowed to pay less.\u00a0<\/p>\n
But of course there are many good reasons for wanting billionaires to pay more than the middle class \u2014 which means rates of more than 2% on their wealth. It will be easier to achieve the desired level of tax progressivity once a solid and consensual foundation is in place.<\/p>\n
What surprised you most in the process of researching and writing this book?
Gabriel Zucman:\u00a0In 2019 we produced, with Professor Saez, the first estimates of the effective tax rates of billionaires in the U.S. This kickstarted an international research effort: in the years that followed, researchers in different countries produced estimates for France, the Netherlands, Sweden, Norway, Brazil, etc. We now have evidence from about 10 countries.\u00a0<\/p>\n
One surprising result that came out of all this is that European countries do even worse than the U.S. when it comes to taxing billionaires. In the European Union (EU), the effective income tax rate of billionaires is often close to 0%! They use holding companies to avoid reporting any sizable amount of taxable income, a form of tax avoidance which has not been possible in the U.S. since the 1930s. This is not to say that U.S. billionaires pay a lot of tax \u2014 they don\u2019t \u2014 but it\u2019s striking that European ones pay even less. In the book, I describe this very recent international research effort and its main \u2014 and often surprising \u2014 findings.<\/p>\n","protected":false},"excerpt":{"rendered":"Billionaire wealth has reached historic highs \u2014 and so has their power. UC Berkeley and Paris School of…\n","protected":false},"author":2,"featured_media":366107,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[143,145,144],"class_list":["post-366106","post","type-post","status-publish","format-standard","has-post-thumbnail","category-oakland","tag-oakland","tag-oakland-headlines","tag-oakland-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/366106","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=366106"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/366106\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/366107"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=366106"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=366106"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=366106"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}