French senators debate new ‘Zucman tax’ on ultra-rich: who would this affect?

A new tax on ultra-wealthy individuals is being discussed in France’s Senate today (June 12) that, if passed, could bring in a reported €20 billion per year to the French state.

The tax, dubbed the Zucman tax after its main proponent, economist Gabriel Zucman, would see households which own at least €100 million in assets hit with a surtax. 

This surtax would be at minimum a flat 2% rate, on top of any other taxes levied, and affect an estimated 1,800 households in the country. 

A bill advocating the tax already passed through the Assemblée nationale in February, after being brought forward by Green MPs during their parliamentary window. 

It was passed after left-wing MPs grouped together to vote in favour of it, and far-right MPs abstained, leaving centrist and right-wing politicians who opposed it outnumbered. 

The reported earnings from the tax – an estimated €15 to €25 billion each year – could be a tempting proposition for the government despite its own MPs voting against the measure.

The hefty windfall covers roughly half of the €40 billion or so in savings prime minister François Bayrou says is required in the upcoming 2026 budget to stabilise the economy and, as it is annual, would pave the way for a steady new stream of tax revenue for successive governments.

How would the tax work? 

The tax is based on arguments by Mr Zucman that the richer a person is in France, the less tax they pay in terms of proportional income. 

He argues that less-wealthy people pay a higher percentage of their income to tax through social charges, income tax, VAT, and other taxes on goods and services. 

Comparatively, wealthier people pay less of their overall income on these taxes, even if some are charged at a higher rate.

Statistically, Mr Zucman says that lower-income individuals pay around half of their income on taxes of various kinds, whereas for richer individuals this drops to 27%. 

The tax as it is laid out in the current bill would apply at least a 2% tax annually on households with €100 million in assets.

This latter point is important as it covers all of a household’s potential portfolio and not just liquid assets.

It can include shares, owned property and luxury goods (expensive cars, yachts etc) as well as annual income. 

France previously had a general wealth tax in place – called the Impôt de solidarité sur la fortune (ISF), but this was replaced by a property wealth tax in 2017 after Emmanuel Macron was elected president. 

The left-wing alliance Nouveau Front Populaire included a return to a wealth-tax style ‘exit tax’ – which would see high-wealth individuals taxed if they tried to leave the country to avoid other taxation –  and a return to the ISF in their 2024 manifesto for the legislative elections.

Economists hold differing views on tax

Despite being advocated for by certain leading economists, others believe the Zucman tax is too ambitious in scope and will cause high-wealth individuals to leave the country. 

In particular, governor of the Banque de France François Villeroy de Galhau said he was ‘sensitive’ to the idea (quoted in French media Europe 1) especially as the government is planning to roll out its own anti-loophole tax measures to increase revenue from high-worth individuals in the coming years.

Part of the reason the tax is estimated to generate so much wealth according to the governor – significantly more than the ISF ever did – is because the assets that are included in the evaluation of a household’s wealth include professional assets such as companies founded in France or by French people. 

This in turn may turn people away from investing in France, or cause French people to start or expand their companies outside of the country. 

However, Mr Zucman himself contradicted the governor on social media site X, saying the proposed “tax does not affect companies [and] would not change anything in the attractiveness of our country for foreign investment.” 

“The basic fact is that with a 2% floor rate, the wealth of billionaires would not be reduced… but it would continue to grow,” he added.

Is it likely to pass? 

Economists are unlikely to agree on the tax any time soon, however such discussions may not be necessary if the bill does not make its way through the Senate. 

Unlike the Assemblée nationale where the chamber is roughly split between the left, centre/right, and far-right – and the left controls the largest overall bloc of MPs – the Senate is majority right-wing. 

Centrist, right-leaning and right-wing Senators hold a commanding majority in the chamber, and if they follow the voting patterns of their fellow MPs, are unlikely to pass the bill. 

Senators are expected to agree with the concerns of Mr Villeroy de Galhau, and be wary of an exodus of high net-worth individuals resulting from the passing of the tax, even if Mr Zucman says their wealth will continue to grow. 

In the unlikely event that it does pass, the Constitutional Council (Conseil constitutionnel) will read the bill and may block certain parts of the bill which could further water it down.