In France, a proposed new tax on the wealthy has sparked a heated backlash from the country’s billionaire class. Business leaders are labeling the initiative as “insane” and “communist,” as the left-wing Socialist Party pushes for those with fortunes exceeding €100 million (approximately $178 million) to pay a minimum annual tax of 2 percent on all their assets. This proposal aims to address the public deficit and is critical for the political survival of Prime Minister Sébastien Lecornu, especially following a hung parliament that has led to significant instability.
The proposal, known as the Zucman tax after economist Gabriel Zucman, would apply not only to cash but also to investments, company shares, and unrealized gains. Critics, including billionaire Bernard Arnault, argue that such a tax would have dire consequences for the French economy. Arnault, who controls the luxury group valued at €256 billion, stated that he cannot fathom how the political forces could support what he perceives as an assault on economic stability.
Echoing Arnault’s sentiments, Éric Larchevêque, co-founder of crypto wallet company Ledger, criticized the tax as a form of collectivism, claiming it infringes on personal freedoms and property rights. Although Larchevêque’s own wealth would place him under the new tax, he maintains that it is fundamentally flawed, especially for start-ups that may not yet be profitable.
Economic implications of the Zucman tax are significant. Proponents suggest it could generate up to €15 billion annually, which could alleviate the need for spending cuts. However, some economists estimate its actual revenue potential could be as low as €5 billion. Former Prime Minister François Bayrou was ousted over a proposed budget that included substantial spending cuts, highlighting the political risks surrounding fiscal decisions.
The resistance to the Zucman tax is not solely limited to business leaders. Public sentiment appears increasingly supportive of taxing the wealthy. A recent Ifop survey commissioned by the Socialists revealed that 86 percent of respondents were in favor of the new tax. Many citizens have taken to the streets, with over half a million participating in protests against upcoming spending cuts, carrying signs advocating for higher taxes on the rich.
Fabrice Le Saché, vice-chair of the business lobby Medef, acknowledged the challenge of explaining the complexities of corporate valuation to the public. He noted that while the idea of taxing the wealthy is palatable, it oversimplifies the financial realities faced by business owners.
While some business figures have conceded that some form of wealth tax may be unavoidable, they hope for a more tempered approach. Potential alternatives include extending temporary fiscal measures from the current budget, such as a tax surcharge on incomes exceeding €250,000 and increasing taxes on large corporations.
As discussions continue, the future of wealth taxation in France remains uncertain, with both political and economic repercussions at stake. The debate highlights the ongoing tension between fiscal responsibility and the pursuit of equity within an economy that hosts some of the world’s wealthiest individuals.
