French business leaders have billed the left’s proposal for a new tax on the very wealthy as “insane” and “communist”, as the Socialist party pressures Emmanuel Macron’s new prime minister to ensure the rich pay their fair share in efforts to narrow the public deficit.
The Socialists’ votes are essential for the survival of premier Sébastien Lecornu, after the hung parliament toppled two prime ministers in less than a year over their attempts to limit public spending. The leftwing lawmakers are pressing for people with fortunes of more than €100mn to pay a minimum of 2 per cent tax annually on all their assets, including their companies, shares of companies and unrealised gains.
Bernard Arnault, chief executive of luxury conglomerate LVMH, said the push amounted to a “clearly stated desire to destroy the French economy”.
“I cannot believe that the French political forces that govern or have governed the country could lend any credibility to this offensive, which is deadly for our economy,” the billionaire said in a statement.
Arnault is not alone in opposing this idea. Éric Larchevêque, a co-founder of crypto wallet company Ledger, told the Financial Times: “It’s collectivism, it’s communism . . . it’s a fundamental attack on my freedom and right to property.”
With Ledger last valued at €1.3bn by venture capital investors, Larchevêque’s stake puts his fortune high enough that he would have to pay the new wealth tax even though the unlisted start-up does not make a profit, nor pay dividends.
If enacted, the so-called Zucman tax — named after Gabriel Zucman, the economist who floated the idea — would be a blow to Macron’s business-friendly agenda since he was first elected in 2017, pledging to turn France into “a start-up nation”.
One of the president’s first moves was to water down a net wealth tax on people’s personal assets above a certain threshold by replacing it with a narrower tax on real estate assets. He also gradually cut corporate taxes from 33 per cent to 25 per cent, and applied a flat tax of 30 per cent on capital gains.
But Macron went on to pay a high political price for those tax cuts, with opponents quickly tagging him as the “president of the rich”.
Macron remained strongly opposed to wealth taxes and saw Zucman’s proposal as an aberration, said a person familiar with his thinking. Lecornu told French regional newspapers that he was open to discussing “tax fairness and sharing the burden”, but warned that “professional assets” needed to be handled with “care”.
Advocates of the Zucman tax claim it will raise €15bn a year, reducing the need for spending cuts when tackling the public deficit, which is expected to reach 5.4 per cent of GDP by the end of the year — one of the highest in the Eurozone.
But other economists said it could raise just €5bn. Lecornu’s predecessor François Bayrou was toppled over his proposed 2026 budget, which included €44bn worth of spending cuts and tax increases.
Arnault billed Zucman a “far-left activist” whose “ideology aims to destroy the liberal economy”. Arnault is one of the wealthiest people in the world, largely due to his controlling shareholding in the €256bn Paris-listed luxury group he built.
Zucman’s “pseudo-academic competence is widely debated”, Arnault said, adding it was aimed at him personally, given he was “certainly the largest individual taxpayer and one of the largest corporate taxpayers through the companies I run”.
Zucman described Arnault’s criticism as “baseless”.
“Coming from one of the richest men in the world and in a context where academic freedom is being called into question in a growing number of countries, this rhetoric . . . should worry us all,” Zucman wrote on X, adding: “It’s time to tax billionaires at a minimum rate.”
The Zucman tax would be particularly problematic for the owners of promising tech start-ups that, despite their high valuations on paper, often do not generate a profit or dividends. These individuals could face tax bills that exceed any liquid assets they have.
The pro-Zucman camp argued that start-up founders could just pay their tax bills by handing over shares of their companies to a French sovereign wealth fund or by borrowing — both heavily contested ideas.
Critics, however, argue the tax may be unconstitutional given how it would affect a small group of about 1,800 people.
Philippe Corrot, co-founder of tech start-up Mirakl, which is valued at $3.5bn, told the FT it was “absurd” and “dangerous” to “put people in a situation of having to sell” parts of their companies to pay taxes.
But the argument that more should be done to tax the super-rich is a popular one in a country that is home to some of the world’s wealthiest people, such as Arnault or the billionaire families behind Hermès and L’Oréal.
More than half a million people marched through the streets of Paris and other French cities last week to protest against looming spending cuts, and many carried signs that called for taxing the rich.
An Ifop study commissioned by the Socialists recently found that 86 per cent of those polled supported the Zucman tax.
“Who is going to say no if you say ‘let’s tax the rich at 2 per cent?’” said Fabrice Le Saché, vice-chair of the business lobby Medef and founder of a carbon credit trading company. “It’s hard for people to understand that the value of a company is not cash in your pocket.”
Many business leaders now believe some form of wealth tax has become inevitable, but hope for a toned-down version. One option would be to extend supposedly temporary measures that were included in this year’s budget, such as a tax top-off on people earning more than €250,000 a year, as well as a rise in taxes on big companies.
“Everyone must make an effort, and no one has said that we don’t want to pay taxes . . . But it mustn’t discourage people from taking risks, it mustn’t be confiscatory,” said Mirakl’s Corrot.
“Would I have created Mirakl in France 15 years ago if these taxes existed?”
Additional reporting by Ian Johnston
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