Gabriel Zucman, the scourge of billionaires, is making waves. The Parisian economist, director of think tank the European Tax Observatory, specialises in international taxation, particularly the non-taxation of the ultrarich. His proposals to do something about it are winning significant support.
At the invitation of Brazil’s president, Luiz Inácio Lula da Silva, current president of the G20 group of major economic powers, Zucman has been making the case for a global pact to levy annually a minimum of 2 per cent of the wealth of the world’s roughly 3,000 dollar-billionaires. That, he argues, could raise $200-250 billion, while extending the tax to centi-millionaires - those worth more than $100 million, of which there about 65,000 worldwide - could generate a further $100-135 billion.
Enough to make serious inroads into major underfunded priorities such as hunger and health or a fair transition to the green economy.
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The G20 has put the levy on the agenda for its autumn meeting. US president Joe Biden has recently proposed a similar “billionaire minimum income tax” of 25 per cent. France, South Africa, Spain and Germany have rallied to the idea, while last month a group of 20 former heads of state and government of G20 countries signed a letter of support. It is, they say, “the opportunity to write a new story about taxation for the first time in a generation” at a time when “billionaires, globally, are paying a tax rate equivalent to less than 0.5 per cent of their wealth”.
It’s primarily about fairness and redressing social inequality, at a time when the gap between the ultrarich and the rest is soaring. An Oxfam report calculates that for every $1 of new global wealth earned in the past two years by someone in the bottom 90 per cent of earners, each billionaire gained roughly $1.7 million. The combined fortune of billionaires had increased by $2.7 billion a day, with pandemic gains coming after a decade when both the number and wealth of billionaires had doubled.
Forbes estimates that in 1987 billionaires’ wealth constituted roughly 3 per cent of world GDP. In 2024 that has risen to a staggering 13 per cent, an average growth of 7 per cent per year net of inflation, more than double average wealth growth. A 2 per cent annual levy would leave ultra-wealth accumulation still far outpacing the rest of us.
The case for billionaire taxation is also about the inability of states to tax ultrarich incomes, in part because of the latter’s ability to hide income as capital or wealth, and the fear that they would flee jurisdictions. Zucman’s research shows that the effective tax rates paid by the ultrarich declines sharply as they enter the wealthiest 0.01 per cent of the population, to the point that, overall, billionaires pay taxes on their incomes at half the rate of all other social groups.
When it comes to the taxation of wealth as opposed to income, Zucman’s G20 report points out that the rates of capital taxation paid by billionaires are typically about a quarter of that of the average person. Residential property taxes, the main wealth-tax impacting the latter, fall far more heavily on average people than on the billionaires, whose main assets are simply not taxed.
“In effect,” says Zucman, “the middle class is subject to wealth taxation while billionaires are largely free from wealth taxation.”
Many European countries used to have a wealth tax, but “the wealth taxes have disappeared because they worked very badly, they exonerated the wealthiest”, Zucman explained to a French magazine recently. Meanwhile, “Europeans did nothing to combat tax competition,” he said. “People could avoid paying tax by relocating to low-tax jurisdictions. It was under pressure from such tax competition that one country after another abandoned their wealth tax.”
Within the EU, Ireland’s long defence of tax competition as a core national value was central to stymying agreements on the taxation of multinational corporations and the sharing of tax data. But in the face of partners’ anger at the erosion of their ability to levy taxes, the argument for global co-operation won out, and huge pressure from fellow member states saw Dublin make a diplomatic retreat. It is now on the side of the angels.
Global co-operation is vital to Zucman’s proposal and, he argues, the deals on corporate taxation and information-sharing were game changers in that regard. They made a billionaire tax possible. Crucially, they show that it is possible to incentivise reluctant states into participation in an international deal and to devise mechanisms to allow states to pursue tax from fleeing billionaires.
There are now a total of 11 Irish billionaires, according to Forbes’ annual list . Their combined net worth reached €49.12 billion in 2024, a significant increase on the €33.61 billion last year. A 2 per cent tax on that wealth could bring in €1 billion a year. Unless, of course, residual ideological objections to supporting Zucman’s project resurface.
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