Zucman Tax Explained: Why Tax the Ultra-Wealthy?

The debate over taxing the ultra-wealthy has reignited across Europe, with the so-called “Zucman tax” at the center of the conversation. Named after French economist Gabriel Zucman, the proposal would impose a minimum 2% annual wealth tax on fortunes exceeding 100 million euros. In Belgium, the discussion has gained particular traction as policymakers grapple with budget pressures and growing wealth inequality. According to RTBF, the proposal is designed as a “floor tax” that cannot be reduced through tax optimization strategies.

The Core Problem: Ultra-Rich Pay Less Than the Middle Class

The Zucman tax addresses a fundamental paradox in modern tax systems. Despite progressive income tax rates designed to make higher earners pay more, the ultra-wealthy end up paying proportionally less than the middle class. Quentin Parrinello, Director of Public Policy at the EU Tax Observatory and a collaborator of Zucman, explained the issue in a recent RTBF podcast: “A person from the middle class pays more taxes than an extremely rich person. The reason is that extremely rich people pay much less income tax. In Europe, the main reason is the use of holding companies.”

According to official data from the French tax administration cited by RTBF, income tax at the very top of the distribution is almost non-existent, amounting to roughly 2% of economic income for the ultra-rich, compared to easily 30% for the middle class.

The mechanism behind this disparity is the widespread use of holding companies. These legal structures allow wealthy individuals to receive dividends without triggering personal income tax, as long as the money remains within the holding structure. Parrinello notes this has “created a phenomenon of worsening inequalities, of acceleration,” enabling the ultra-rich to reinvest, buy companies, purchase media, set up foundations, and engage in philanthropy “without paying taxes.”

Who Would Be Affected?

The Zucman tax specifically targets what Parrinello calls the “ultra-ultra-rich” — not the top 1%, but those with fortunes exceeding 100 million euros. In France, this would affect approximately 1,800 households. As Parrinello explained: “We’re not talking about the richest 1%. We’re not talking about people who have an apartment in a big city. We’re really talking about the ultra-ultra-rich. In France, the plunge in income tax, the moment when the tax system starts to become regressive, is effectively around 100 million euros in wealth.”

The proposal has gained significant public support. An Ifop poll found that 86% of French people support the Zucman tax. Zucman himself argues that the measure would raise approximately 20 billion euros annually in France and up to 67 billion euros across EU member states, according to Euronews.

The Belgian Connection

While the Zucman tax originated in France, the debate has resonated strongly in Belgium. The country does not have a net wealth tax, but since 2021 it has applied a 0.15% annual tax on securities accounts exceeding 1 million euros. The Flemish socialist party Vooruit has proposed a more comprehensive “millionaire tax” on all financial assets above 1 million euros, with progressive rates from 0.3% to 0.6%. As RTBF notes, Vooruit president Conner Rousseau has called for “the richest 1% of our country to finally contribute fairly.”

However, economists remain divided on the effectiveness of such measures. Mikael Petitjean, chief economist at Waterloo Asset Management and professor at UCLouvain, warns that “it won’t just affect billionaires. We need to be aware that this tax will also affect entrepreneurs who have developed their businesses and family businesses.” He also disputes the revenue estimates, telling Euronews: “I don’t think we’ll come up with 20 billion euros. Some estimates are more like 5 billion euros, but I even wonder. I think it’s even possible that it won’t make any money at all.”

Opposition and Political Setbacks

The proposal has faced fierce opposition from some of France’s wealthiest figures. Bernard Arnault, CEO of LVMH and one of the world’s richest men, has publicly attacked Zucman, calling him a “far-left militant” and questioning his academic credentials, according to RTBF.

The French National Assembly rejected the Zucman tax proposal on October 31, 2025, including a compromise version proposed by the Socialist Party that would have set a 3% minimum tax on fortunes above 10 million euros. As RTBF reported, the rejection triggered threats of censure from the Socialist Party, deepening France’s political crisis.

The Fiscal Exile Debate

One of the most persistent arguments against wealth taxation is the risk of capital flight. Critics like Cristina Enache, an economist at the Tax Foundation, warn that “even a small increase in the tax rate can lead to capital flight and the relocation of wealthy individuals to neighboring jurisdictions.”

But supporters argue the evidence shows tax exile is limited. Giulia Varaschin, policy adviser at the EU Tax Observatory, told Euronews: “The data we have on capital flight following tax increases shows that tax exile is very, very marginal. And according to all the data we have, it has always had a negligible economic effect.”

The Zucman proposal includes an anti-tax-exile mechanism that would require individuals to continue paying the tax for 5-10 years after leaving the country. As Parrinello explained: “Fiscal exile is not a law of nature. We can decide to tolerate the fact that a person who has lived their whole life in a country like France or Belgium, and who became extremely rich partly because of the quality of education, infrastructure, and the legal system that protected businesses in that country, can leave overnight without paying taxes. But conversely, we can also decide to maintain a form of taxation.”

A European Movement?

Only seven European countries currently apply wealth taxes in any form: Norway, Switzerland, and Spain tax net wealth, while Belgium, France, Italy, and the Netherlands tax specific asset categories. Most European countries abolished their wealth taxes between 1992 and 2018, according to RTBF’s analysis.

Zucman argues that the momentum is shifting. In an interview with RTBF, he pointed to the G20 discussions in 2024, the French National Assembly’s vote on the floor tax in 2025, and emerging debates in Spain, the Netherlands, the United Kingdom, Brazil, and California as evidence that “we are at the beginning of an international movement to more effectively tax billionaires and very high wealth.”

What’s Next

As the debate continues, Zucman emphasizes that the parameters are open for discussion. “All parameters are open for discussion, like the 100 million euro wealth threshold. The proposal is above all to create a new principle: that extreme wealth must be accompanied by minimal, incompressible tax contributions every year. This is a discussion that must be decided democratically, there’s no magic formula.”

For Belgium, where the federal debt continues to grow and budget negotiations remain contentious, the question of how to tax the ultra-wealthy is likely to remain a central political issue. Whether through a Zucman-style floor tax, Vooruit’s millionaire tax, or other mechanisms, the fundamental question persists: should extreme wealth carry a minimum tax burden, regardless of how sophisticated one’s tax planning may be?