Will billionaires kill France’s proposed wealth tax?

France’s tottering government is stuck in a hard place. Premier Sébastien Lecornu, in office only a few weeks, needs the backing of the country’s Socialist party to stay in office. But the party is demanding a new wealth tax on the country’s wealthiest citizens — and the rich are striking back.

The proposal would impose a 2% annual tax on the country’s biggest earners, “including their companies, shares of companies and unrealized gains,” said the Financial Times. France’s billionaire class says that is “insane.” A wealth tax is “deadly for our economy,” said Bernard Arnault, chief executive of LVMH and one of the wealthiest people in the world. But advocates say the tax would reduce the need for unpopular spending cuts and “ensure the rich pay their fair share,” said FT.

The wealth tax was inspired by economist Gabriel Zucman, said The New York Times. Zucman’s ideas also “align closely” with New York City mayoral candidate Zohran Mamdani’s push to raise taxes on that city’s wealthiest individuals. In both France and the United States, “people see that everyone pays a lot of tax, with one exception: ultra-high-wealth individuals,” Zucman said. One other commonality: Business leaders oppose Zucman’s ideas “on both sides of the Atlantic,” said the Times.

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What did the commentators say?

Opponents of the tax say France’s budget woes are the result of the nation’s “profligate welfare obligations,” said Harrison Stetler at The New York Times. Another explanation is that “tax cuts for corporations and the wealthy” under pro-business President Emmanuel Macron helped cause the shortfall. The public generally believes the latter idea. One poll found that more than three-quarters of French respondents favor “targeted taxes on the ultra-wealthy.” Passing that tax would be both “savvy politics” and “smart economics.”

A wealth tax, its detractors say, is “not the kind of invention France needs right now,” Lionel Laurent said at Bloomberg. The proposal is “insanely popular with the 99.99% who wouldn’t pay it.” And the tax might not be worth the effort. One study suggested the tax would raise a mere €5 billion in new revenues for the French government. France already boasts the “highest tax burden and near the lowest income inequality in Europe.” A wealth tax would be “more placebo than magic remedy.”

Zucman has come under “intense attack by France’s billionaires” who have called his idea “communist,” Harold Meyerson said at The American Prospect. That might be true if the tax took 100% of their wealth, “but taking 2% falls 98% short of that.” A similar proposal from Democrats in America could help the public “in multiple ways.” One 2024 poll found that 80% of the public favored a corporate tax on “excessive CEO pay.”

What next?

Lecornu is the “fifth French prime minister in less than two years,” said Politico. He probably cannot muster support in the National Assembly for “tens of billions of euros of budgetary belt-tightening.” But he may have some room for maneuvering. If Lecornu will not get behind the wealth tax “but increases the minimum wage, we’ll take a look,” said an unnamed Socialist official to Politico.