Zucman calls for a 2% wealth tax on the super-rich

Economist Gabriel Zucman is calling for a 2% tax on the wealth of billionaires, including in Switzerland. He argues that the super-rich often pay less tax relative to their income than other people. SRF reports that he wants a minimum tax calculated on wealth, rather than income.

Zucman says billionaires can avoid reporting income by directing their companies not to pay dividends or salaries, and by not selling shares. He argues that taxing wealth is needed to uphold equality before the law.

A professor at the Paris School of Economics and the University of California, Berkeley, Zucman is known for research on tax havens and for advocating a global minimum tax on companies. He now wants a similar approach for wealthy individuals.

Zucman accepts that a new wealth tax could prompt some billionaires to leave a country, but says research suggests the share would be small. He cites Norway, which raised its wealth tax in 2022. Tax revenues rose by 72%, compared with an estimated 75% increase if nobody had left, he says.

He also argues that countries could continue taxing wealthy people after they move abroad. The United States taxes its citizens throughout their lives regardless of where they live, while the United Kingdom continues to levy inheritance tax for ten years after wealthy people leave. Zucman proposes that Switzerland tax people for another five to ten years after they move away. He says long-term residents may retain ties to the country through property and the need to renew their passports.

Switzerland has no wealth tax at federal level, but its cantons still levy one. Zucman says the rates are too low and wants a 2% tax, potentially introduced as a federal wealth tax. Researchers at the University of Lausanne estimate that wealth in Switzerland is taxed at an average rate of 0.3%.

Michele Salvi of the liberal think tank Avenir Suisse says Switzerland already raises almost 10 billion francs a year from wealth taxes, making it the wrong country for such a proposal. Karin Stüber, an heir and chairwoman of Switzerland’s largest Mercedes dealership, says she is not opposed to a wealth tax in principle but considers a 2% rate too high. She says she could not pay it from her income without her company distributing most of its profits instead of investing them.

Zucman counters that wealthy people can report very little income despite holding substantial assets. He has argued that Amazon chief executive Jeff Bezos once reported so little income that he qualified for social benefits, because he was considered poor for tax purposes.

Zucman believes one country could introduce a wealth tax and encourage others to follow. He compares the prospect with France’s introduction of value-added tax in 1950, which other countries adopted over the following decade. But most countries have abolished their wealth taxes in recent years.

In a representative Tamedia poll this spring, 68% of respondents supported a federal tax to fund the old-age pension system and the armed forces, while 25% opposed it.