France and the EU Grapple with Wealth Tax Reforms Amid Economic Challenges
France and the EU face significant challenges in implementing wealth taxes amid political, economic, and coordination hurdles, with the Zucman tax proposal at the center of debate.
- • The Zucman tax proposal in France seeks a 2% levy on wealth above €100 million to improve tax equity.
- • Belgium and Germany are preparing new wealth-related taxes, while Spain remains the only EU country with a net wealth tax.
- • EU-wide wealth tax faces hurdles due to unanimous member state agreement requirements, making coordination difficult.
- • France's economic crisis centers on limited growth and rising debt, complicating fiscal reforms including tax policies.
Key details
France is embroiled in a complex debate over wealth taxation to address growing fiscal deficits and economic inequality. The left-wing in France advocates for the Zucman tax, a proposal from economist Gabriel Zucman that suggests a 2% tax on wealth exceeding €100 million to enhance fiscal equity. This initiative remains resilient despite France’s political instability and absence of a state budget. Quentin Parrinello, director of public policies at the European Tax Observatory in Paris, highlights that the question of taxing ultra-rich individuals is under discussion across Europe, reflecting a broader challenge given modern tax systems' limitations in effectively taxing wealth primarily built on income, consumption, and corporate taxes (94580).
Belgium plans to implement a 10% capital gains tax on financial assets starting January 2026, while Germany may reform inheritance taxes following a constitutional court decision, signaling tightening fiscal policies on wealth in key EU economies. Spain currently stands as the only EU member with an existing net wealth tax, although experts suggest reforms there for enhanced effectiveness. However, the EU faces substantial hurdles in coordinating a unified wealth tax, as unanimous agreement from the 27 member states is mandatory, making proposals like the European Zucman tax politically unrealistic according to Nicolas Véron of the Bruegel think tank (94580).
Meanwhile, France's economic context depicts a broader crisis in growth levers rather than outright collapse. Philippe Waechter, chief economist at Ostrum Asset Management, argues that France's potential GDP growth is too limited to eliminate its public deficit, projected to linger at 3% medium-term, while public debt has been rising steadily since 1975. He stresses that past economic imbalances were remedied through strong commitments to European partners — an approach needing revitalization. Waechter critiques current proposals, including tax increases, viewing them as inadequate solutions, and emphasizes the urgency for reforms to maintain France's global competitiveness (94582).
Together, these developments illustrate the intertwined fiscal and economic challenges facing France and the EU, with the taxing of ultra-rich citizens central to much of the ongoing debate. The prospects of capital flight, political fragmentation, and limited EU tax authority complicate the implementation of effective wealth taxation, leaving policymakers at a crossroads between tolerating tax avoidance or enacting bold, coordinated reform (94580).