Hello everyone. Hello everyone and welcome to the first interview of Room for Discussion in 2026.
Today the world's richest individuals pay lower tax rates than the average worker, and the world's biggest corporations continue to book their profits in tax havens. This situation is leading to rapidly increasing economic inequality, eroding the social contract that builds our democratic societies.
Our guest today focuses exactly on this gap between how tax systems are meant to work and how they work in practice. He's professor of economics at the Paris School of Economics, UC Berkeley, and the director of the EU Tax Observatory. And this year he has moved from assessment to action, putting forward a proposal for a 2% wealth tax annually on billionaires. Today we'll discuss this proposal, the political questions it raises, and the potential challenges to its implementation.
My name is Anar
and my name is Helen. And without further ado, please join us in welcoming Professor Gabriel Zucman.
Thank you very much for having me.
Thank you very much.
Professor Zucman, welcome to Room for Discussion. We're very glad to have you here today.
Thanks for having me. Pleasure to be here.
Thank you. And you've gotten a lot of public attention in recent years. I think in September, Politico called you the new rockstar economist. Do you feel like a rockstar economist?
Uh no. You know, I do my research and I'm a researcher. So I like to understand how things work, and I'm a professor. So I like to explain how things work, and that's what I try to do in my books and in those public lectures.
Yeah. And as you mentioned, you explain primarily about the increase we've seen in economic inequality. It's part of a growing body of literature together with Piketty and Emmanuel Saez, who you worked with, arguing that over the past four or five decades the European and American economies, for example, have become much more unequal. But for those not really as up to date with the economics literature, how unequal have our economies really become?
Well, first of all, what I would stress is that over the very long run there is a big movement towards more equality. So we live in vastly more equal societies today than in the 19th century, in the 18th century. And that's really important, right? And that's one thing. The second thing is that this movement towards equality has kind of stopped in the 1980s and in some cases has reverted. And that's particularly true in the US, where income concentration has returned to its level of the beginning of the 20th century. Wealth concentration as well, and in fact by some metrics there's never been as much wealth inequality in the US.
If you look at extreme wealth, the oligarchs, you know, look at the top 0.00001% of the wealthiest people in the US. So that's about 19 households today. In 1910, you know, at the peak of what is known as the Gilded Age, you know, the era of the big monopolies and Rockefeller and JP Morgan and the likes, these oligarchs, they owned in wealth the equivalent of 4% of US national income. And today you look at the same group of the population and they own the equivalent of 12% of US national income.
So we're talking about 19 households who, if they spent their wealth, they could buy 12% of the value of everything that's produced, all the goods and services produced in a given year in the US. So by that metric we are well past, in a country like the US, the peak of the Gilded Age. And I think everybody here realizes how this extreme concentration of wealth affects society domestically in the US and increasingly internationally.
This trend is very well established. I would say, I mean, most of your colleagues in the economics profession would argue that this stems from rapid technological progress and that benefiting certain groups. You, however, argue that this primarily comes down to political choices. Why are you so sure of that?
Well, you know, there's nothing natural in the evolution of inequality. You know, it's not because there's technological progress that you should have more inequality, right? It really depends on how we organize society. So okay, you have big AI companies and you know there's innovation there, but who benefits from that entirely depends on who owns those companies, right? So if they just belong to a handful of billionaires, okay, their success is going to translate into more wealth concentration. But there are many, many other ways to organize things, right? So you could have more worker ownership of companies, you could have some ownership by governments, by local governments, by federal governments. You know, anything is possible, right?
So there's the view that there's a kind of mechanical link between technology and inequality. First of all, conceptually it doesn't make a ton of sense because we understand that we can organize society in many different ways. And second, empirically it's also not what you see, because technological progress, no, it doesn't happen only in the US, it happens all over the world, and yet inequality has evolved very differently in different countries, right? It's as I said, increased particularly fast in the US, but much faster than in countries like the Netherlands or continental Europe or Japan. You know, Japan also has modern technology, but they don't have like this class of oligarchs like the US has.
So let's make this concrete. Your new book came out, and let's assume it becomes a massive success. We're talking bestseller list, couple of speaking tours, maybe some Netflix adaptations, and before you know it, you're worth several billion dollars. In today's tax system, what is the simplest or easiest way for you legally to keep your tax bill low?
Uh, first of all, I don't think I'm at risk. Uh, second, indeed, what recent studies have shown is that the billionaires, they don't pay any significant amount of income tax. They largely escape income taxation, and the way they do that is through various techniques. The basic problem is that when you're extremely wealthy, it's very easy to structure your wealth such that this wealth will generate very little or sometimes no taxable income.
So you had, for instance, revelations by the US media ProPublica a few years ago about the taxes paid by US billionaires, and you saw people like Jeff Bezos, like Elon Musk, reporting very little income, paying almost no income tax. In one year, Jeff Bezos said, 'Oh, look, I'm so poor that I'm going to claim family benefits.' And you know, he got family benefits on his tax return. And there's nothing illegal in that. I want to be very clear. It's the way the system works. As CEO of Amazon, he didn't pay himself a wage. Amazon didn't distribute dividends. He didn't sell shares. And so he didn't realize capital gains. And so his taxable income was indeed very low, even though his wealth is very large, his true economic income, his share of Amazon's profit, is very large.
And what studies have shown over the last four, five years — it's very recent — is that the problem goes way beyond just a few isolated cases like Bezos. It's a systematic issue. You know that billionaires in the Netherlands, in France, in Germany, in the US, in Brazil, in all those countries where we have now excellent studies that have been conducted in partnership with tax administrations, the income tax essentially vanishes for the super rich. And as a consequence of that, the effective tax rate of billionaires, all taxes included, when you add up everything — consumption taxes, VAT, corporate tax, property tax, what have you — is about half as large for billionaires as for the rest of the population.
But in fact, in the Netherlands, just one number is particularly extreme. You know, the billionaires — there's a very good study that was done by Valerio Lenders here and his colleagues that showed that the super rich in the Netherlands, they pay 17% of their income in taxes, all taxes included, as opposed to 40, 45% for the average Dutch person. That's a very serious problem because it's a violation of our most basic principles of equality before the law. Equality before the law in the realm of taxation means equality before the tax law. The most conservative interpretation that you can make of that principle is that the super rich shouldn't be allowed to pay less taxes relative to their income than the rest of the population. But now we know that this is a situation we are in today.
But might be quite confused about how this actually happens. I mean, concretely, this is the rich borrowing against their assets, right?
Not necessarily. The way it happens is that, so you have to understand that income for most people is wages, it's pension income, but for the super rich income is mostly dividends, right? It's their share of the profits of the companies that they own. And the way that they avoid paying taxes on dividends is that they put their shares in holding companies. So that on paper the dividends are earned not by physical persons subject to the individual income tax, but by the holding companies, largely free of any income tax.
Now the holding companies — think of the holding companies as kind of shell corporations that allow wealthy people to disconnect themselves from their wealth and to avoid taxes like that. And so now your question is, okay, but the money is in the holding company, so is it trapped? Does it mean they cannot do anything with the money? And the answer is no. You know, they can do pretty much anything they want with that money. Meaning they can buy real estate, they can buy yachts, they can buy media. They like to do that a lot — the billionaires, newspapers, TV channels. They can do philanthropy. They can do all sorts of investments.
The one thing that in principle they cannot do is kind of use the money of the holding company to fund their own personal consumption expenditures, like, you know, buying an opera ticket. You know, in principle you have to withdraw the money from the holding company to do that. But you have to realize that these type of expenses are just really tiny, tiny, tiny relative to their income, right? If you earn, you know, 3 billion euros in income, like France's wealthiest person, you know, your consumption, even if you spend lavishly, is going to be what, perhaps 30 million euros, you know, just 1% of that. So you have to pay tax on that 1%, but for the 99% that remains, the money remains in the holding company and can be invested free of tax.
And what do you think happens to people's trust in the tax system if this is not the result of any illegal matter, but just following the rules?
Well, I think this issue of violation of our principle of equality before the law is actually a very serious concern for our societies for the following reason. I think it's not acceptable that there should be two different sets of laws, different sets of rules, more lenient rules, more lenient laws for the very rich and stricter and harsher laws for the rest of the population. It's just, you know, so orthogonal to what it means to live in a democratic society, so orthogonal to what the rule of law means. And so that's why I think we should all be very concerned about that.
The second reason why we should be concerned is the budgetary stakes involved, the government revenue stakes involved. So 40 years ago, billionaires were much less rich than today. So the fact that they didn't pay much tax, you know, the implications for public finance were limited. Today, their wealth has exploded over the last decades. You know, it's been one of the most striking evolutions of the world economy, the boom in billionaire wealth. And so now the fact that they escape taxation has actually first-order consequences for government revenue. The taxes that they don't pay, the rest of the population has to pay in one way or another. You know, either through higher taxes for themselves or lower spending on retirement, health care.
I know I've heard some announcements were made, you know, on Friday in that country about kind of the plans of the government for the future budget, where essentially — and it's not just in the Netherlands that people do this — the basic idea is, well, we need to spend more on defense, we need to curb deficits, and the way we're going to square the circle is we're going to ask everybody to make some sacrifices except the very wealthy, who turn out to be those who pay the least in taxes. We cannot ask anything from them. So it's the rest of the population that's going to have to work for a longer period of time or get less reimbursement of their out-of-pocket health care expenses.
And look, I don't think it can really work, right? It's so blatantly unfair that, for instance, in a country like France, the way it ended up is like the governments just fell, you know, one after another.
Yeah. And so this largely summarizes your previous work and your books released previously, and that in the past few years you really moved on from mapping the problem to suggesting your own solution. And specifically what you've been hammering home is this 2% wealth tax on wealth above 1 billion annually. Why do we need this new wealth tax rather than repairing the existing patchwork of income capital taxes?
So let me try to explain a little bit the idea and why in particular it's not a wealth tax. And I think it's important to have a different word because there's a long experience with wealth taxation in Europe, including to some extent in the Netherlands with box three, which by and large was a big failure. And what I've tried to propose is to do something really different. The basic idea is we need to create a new principle. Not very complicated, not very controversial. The principle that if you're extremely wealthy, you have to pay a minimum amount of tax each year. No matter your personal circumstances, your merits, the rate of return on your wealth. We don't want to know.
If you have, let's say, more than a hundred million euros in wealth — and we can debate the threshold — you have to pay an uncompressed minimum. Okay, who disagrees with that? Nobody disagrees with that, and yet it doesn't exist in our tax laws. So first, let's create that principle. Second, how do we do it effectively? If you compute the minimum as a fraction of income, it doesn't work. We just went through the case of Jeff Bezos. You know, he reports no income. Minimum tax as a fraction of income is just zero. So no progress made. For the minimum to be effective, it has to be expressed as a fraction of wealth.
Hence the proposal in the book, which is to create a minimum tax for the super rich equal to 2% of their wealth. You know, not a very radical idea, and yet important because it would be a qualitative step. It would be like extending a little bit the scope of democracy, because it would be saying that the super rich, they cannot accumulate wealth tax-free outside of any form of public authority. They have to be subject to the same rules as the rest of the population. And that, I think, this principle is really very important.
Yeah. A wealth tax, as you just alluded to, is unconstitutional in many European countries, including France. So is this distinction maybe also a bit of a political tactic?
I think what's unconstitutional, to be honest, is the status quo. You know, in all our laws and often in our constitutions, there is a principle of equality before the tax law, and having billionaires pay much less than the rest of the population, that's a violation of this principle. And the 2% minimum tax is a way to, in fact, make our laws consistent with our fundamental constitutional principles. So it's not that it will be unconstitutional. It's that refusing this reform and accepting the status quo, I think, is unconstitutional.
Sure, that's your opinion. But some people are arguing that it is unconstitutional. So your framing of it as an income tax rather than a wealth tax — it's really a question of what vocabulary do you use, right? It's the same thing. Is that kind of a tactic to talk about it like that?
No. But the thing is that what's really important to understand is that you've had this long experience with wealth taxation in Europe. France used to have a wealth tax. Germany, Sweden, Denmark, Norway, you know, many, many countries. And those wealth taxes — that's in the context of those wealth taxes that you had those constitutional rulings about those taxes being unconstitutional. But what we're discussing today really has nothing to do, on the substance, with what was done in the past.
So the past wealth taxes, they started much lower in the wealth distribution. You know, they were essentially on kind of the upper middle class, the rich, the merely rich, but they didn't tax the super rich. In France, the effective wealth tax rate for billionaires was 0.005%. Think about it. You create a wealth tax, and you know the wealthiest people in the country, they can — and it's legal — they can pay zero essentially. Okay. So that's in that context that constitutional courts have ruled that those taxes had problems, and they had serious problems, you know, of unfair treatment of certain categories of taxpayers relative to others. And I have no problem with that.
Here what's being proposed is kind of trying to do the opposite. It's not about taxing the merely rich. Don't get me wrong, I have nothing against taxing the merely rich. I think they should pay more tax, right? That's no problem. But it's not about that. It's about taxing the ultra-wealthy, right? And so that's why it starts really high. If you have 100 million or less, you're not affected. So it's only those who have 100 million who would have to pay this 2% tax, and only those among the super rich who pay less than 2% of their wealth in tax today. But with no exemption, no loophole.
You know, in exchange for this very high threshold, everybody understands that, okay, if you have more than 100 million, you have a high ability to pay taxes, and so you don't need any kind of deductions or exemptions whatsoever. And so you're not going to be able to avoid the tax. So it would be the first tax in kind of in history that would actually make billionaires pay. This has never existed. And so once it's going to be enacted — because I am certain that it will be enacted, perhaps the Netherlands will be the first country — then of course the constitutional courts will have to say whether it's constitutional. And who's going to say that the principle that billionaires should pay as much as the rest of the population is somehow a violation of our constitution?
So this is the proposal on the surface level, right? And let's dive into what it actually means. For a long time, this kind of international wealth taxation — because this has to be international, right — was considered unfeasible because of the communication issues. You argue that this is no longer true. Why is that the case?
I think first of all, I don't agree with the idea that you often hear that this has to be international for this type of tax to work, we have to do it collectively, because you know deep down all these debates always boil down to the idea that if you tax the wealthy they will move, right, and they will move to Switzerland, to a tax haven, and so we are powerless, and so either we do it globally or we don't do it. Now that view is wrong. This view is wrong because tax exile is not some law of nature. There are policies that individual countries can implement on their own to fix that problem.
And so in particular, as I explain in the book, what any country can do is it can say, look, if you have become a billionaire in the Netherlands and now you move to Switzerland, you're free to do so — freedom of movement, go have fun in Zurich — but you will face the same tax as if you were still a resident of the Netherlands. This 2% minimum tax will keep applying for five or 10 or 15 years after you've moved. So that it's neutral. It doesn't make any difference whether you are in Amsterdam, in Zurich, in Monaco — same tax bill. Okay. And so we don't need an international agreement to do that. The Netherlands could do that and would be justified in doing so.
Because if you've become a billionaire in the Netherlands, that's of course because you've benefited in large part from public infrastructure, from education, from healthcare — not mentioning the knowledge that was accumulated over centuries by all of humanity. And so you don't have a right, once you've become a billionaire, to say, I don't care, I move to another planet, I don't have any duty towards society anymore. If your new country doesn't tax you, fine, that's their choice. Your origin country, where you've built your wealth, has to keep taxing you.
But what would you say has changed over the last years that made a bit more of a cooperation also possible?
That's a very important question, and indeed the reason why I think this type of anti-exile rule that I just explained can be implemented today is because there's been a lot of progress in recent years in international information exchange. So 10, 15 years ago there was complete bank secrecy in offshore financial centers like Switzerland. And so the idea that the Netherlands, for instance, could keep taxing its billionaires once they've moved to Switzerland, you know, people thought it would be impossible to enforce in practice just because there was so much opacity.
But since 2018, there's an automatic exchange of bank information between Swiss banks, offshore banks in all tax havens, and more than 100 countries. And so now we just need to use that information to do something useful. So at the moment the tax administrations, they receive all those reports from Swiss banks, but they're not using that information for much, and they could use it to prepopulate tax returns for billionaires and telling them, look, we know a lot about your wealth. So here's how much you have to pay, and if you move to Switzerland we'll keep receiving that information, so you will keep having to pay the minimum tax.
Okay. So let's suppose that it is technically feasible to implement it, and you obviously have different proposals for that. And the most common thing you would hear against that is that this risks harming economic growth because you would have huge capital flow out of the countries that do implement this tax, leading to a decline in investment. How are you so sure that the gains outweigh the losses?
So there's not going to be any capital flight, because the way this works is it's a tax not on corporations, it's a tax on individuals who personally own more than 100 million euros in wealth. So it has no effect on the choice to invest in the Netherlands or in other countries. Then the individuals themselves, if they decided to move their assets to other countries, like, okay, I'm going to send my money to Dubai or to Singapore, it makes no difference because they would be taxable on their worldwide assets. The location of the wealth doesn't matter. What matters is that they live here in the Netherlands.
And because there is this automatic exchange of bank information, sending money abroad doesn't allow them to evade taxes. So there's no concern to have about investment, about capital flight. The concern that sometimes people have is about — and I've had lots of these debates in France — is about innovation. And frankly, it's a bit surreal to talk about that. You know, so the argument sometimes you hear, and very distinguished economists have made that argument, is that somehow this 2% minimum tax on the super rich is going to reduce or even destroy innovation.
Wow. You know, millions of people innovate each and every day. It's just not just a handful of billionaires who are innovating, right? So first of all, that there is that even if they innovated, even if they were very important in innovation, the idea that asking them to pay 2% when their wealth is growing 10% a year is going to somehow change their behavior, their innovation, their work, no matter what they do, that doesn't really make sense, right? That wealth would keep growing a lot, 8% per year.
And then sometimes you hear the idea that, okay, perhaps it's not so much that the billionaires are going to change their behavior, but it's going to discourage young entrepreneurs, you know, like yourselves. You know, you'll be like, 'Wow, I was considering creating my AI startup, but now that I've learned about this project of a 2% minimum tax for people with more than 100 million euros, I'm really discouraged. You know, I'm going to choose a different career path.'
Well, okay. But I mean it sounds really silly, and it is very silly, and yet you hear those arguments all the time, even though obviously, you know, there's very little sense in it.
