The Week: France’s wealth tax debate pits billionaires against Socialist demands

A recent analysis by The Week highlights the precarious situation facing France’s new government as it grapples with budgetary challenges and rising political tensions. Prime Minister Sébastien Lecornu, in office for only a few weeks, finds himself caught between the Socialist Party’s insistence on a new wealth tax and pushback from France’s ultra-rich, who warn the measure could harm the economy. The proposed tax, inspired by economist Gabriel Zucman, would impose a 2% annual levy on the country’s wealthiest citizens, including their companies, shares, and unrealized gains, aiming to ensure that ultra-high-net-worth individuals contribute their “fair share.”

France’s billionaire class, including LVMH CEO Bernard Arnault, has fiercely opposed the measure, calling it “insane” and warning it could damage the nation’s economic competitiveness. Supporters argue that a modest wealth tax could reduce the need for unpopular spending cuts and bolster fairness in the fiscal system. The proposal reflects a broader global conversation about taxing extreme wealth, with parallels in the United States, where candidates like New York mayoral hopeful Zohran Mamdani have advocated similar policies. Across the Atlantic, business leaders also resist these ideas, highlighting a common pattern of elite pushback.

Public opinion appears to favor the measure. Polling cited by The Week indicates that over three-quarters of French citizens support targeted taxes on the ultra-wealthy, viewing them as both politically shrewd and economically sensible. Critics, however, question the practical impact of such a tax. Some analysts suggest the revenue gain could be as little as €5 billion, a relatively minor sum given France’s already high overall tax burden and relatively low income inequality. Detractors, including Bloomberg’s Lionel Laurent, argue that the tax may serve more as a symbolic gesture than a meaningful fiscal tool, appealing to the majority who would not pay it rather than materially addressing budget shortfalls.

The debate also reflects deeper disagreements about the roots of France’s fiscal challenges. While some claim that excessive welfare spending drives deficits, others point to corporate and wealthy tax cuts under President Emmanuel Macron’s pro-business policies. Economists like Zucman counter that wealth concentration has created systemic inequities, and that even a modest 2% levy on billionaires is far from “communist” in effect, falling well short of confiscating total fortunes. Similar proposals in the U.S., such as a corporate tax on excessive CEO pay, have also garnered strong public support, suggesting a broader appetite for addressing extreme wealth globally.

Lecornu’s political situation compounds the complexity. As France’s fifth prime minister in less than two years, he faces a fractious National Assembly and limited room for maneuver. Socialist lawmakers have indicated flexibility, suggesting they might consider alternative measures, such as raising the minimum wage, if Lecornu resists the wealth tax. The outcome of this debate will signal not only the government’s approach to economic fairness but also its ability to navigate the competing pressures of public demand, elite opposition, and fiscal necessity.

By Vugar Khalilov