A group of Nobel Prize winners calls for taxes on the largest fortunes

Seven Nobel Prize-winning economists have appealed in the daily Le Monde for France to introduce a tax on the fortunes of its wealthiest citizens. This would involve a 2% income tax for those with the largest fortunes. The French Senate recently rejected this proposal.

"France once again has an opportunity to show the way to the rest of the world," said economists Daron Acemoglu, George Akerlof, Abhijit Banergee, Esther Duflo, Simon Johnson, Paul Krugman, and Joseph Stiglitz . They emphasized that it is in France that the largest fortunes are particularly prosperous: globally, the wealth of the super-rich is equivalent to 14 percent of global GDP, while in France, the fortunes of the super-rich are equivalent to almost 30 percent of the national GDP.

As economists point out, research conducted in collaboration with tax administrations in many countries has shown that the owners of the largest fortunes "pay between zero and 0.6% of their wealth in personal income tax. This is around 0.6% in countries like the United States and 0.1% in France." The authors of the letter explain that this is possible because the super-rich "can structure their wealth to avoid income tax, which is usually the foundation of fiscal justice."

"In European countries, this optimization is achieved through the creation of family holding companies in which dividends accumulate, protected from tax authorities," the economists note. They point out that such practices are not permitted in the United States.

The authors of the letter estimate that globally, introducing a 2% tax rate on the fortunes of the largest billionaires would generate tax revenues of around $250 billion, even though it would come from just 3,000 taxpayers. In Europe, this could generate €50 billion.

The appeal recalls that in France, the lower house of parliament voted in favor of creating a 2% tax on fortunes exceeding €100 million, but the Senate opposed it. However, such a solution "would ensure that the super-rich contribute to the common burden in the same proportions as the average French person," the letter's authors argue.

They recalled that France was the first country to introduce a VAT in 1954. "While VAT was a tax of the post-war era, a tax on the super-rich is what we need today, in an era of exploding wealth," the signatories emphasized.

Their appeal aligns with the ideas of French economist Gabriel Zucman, who has long advocated for a global tax on billionaires. He argues that the super-rich do not live off their income, but rather off their capital (e.g., shares in the companies they control), which is why their tax rates are lower than those of other taxpayers who pay income tax . (PAP)

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