A wealth tax? A Zucman tax

In France, the talk is of a "Zucman tax", not of a "wealth tax". France already has a wealth tax of sorts (but only on real estate). More to the point, it had a wider wealth tax from 1981 to 2017, and it was a sham.

In his very short and excellently clear new book, We need to tax billionaires, the French economist Gabriel Zucman writes: "In 2016, on the eve of its abolition, the effective wealth tax rate for billionaires was just 0.005%".

They had most of their wealth in "holding companies", and so-called "professional assets" in those companies were exempted from the tax.

Zucman proposes a minimum tax of 2% of wealth on all fortunes of $100 million or more, which in France would hit about 1,800 households.

It would raise €20 billion a year, in France. The essence for Zucman is to stop the super-rich escaping income tax as they largely do at present.

They escape because only a small part of their huge actual incomes appears as income. "You can only spend so much on luxury cars and Swiss watches", and the rest is paid into "holding companies" and appears as unrealised "capital gains" and so untaxed.

In Zucman's plan, those super-rich who already pay over 2% of their wealth would incur no extra tax. For the huge majority, his plan would lift the tax they pay relative total income to around the same level as ordinary workers.

Would they flee? The simple answer is to copy the USA, which taxes its citizens wherever in the world they live. Zucman points out that international reforms since 2008 make it possible for tax authorities to assess worldwide assets.

Doctors, lawyers, local authority CEOs, smaller capitalists, and others well-off but not super-rich, pay higher tax rates than ordinary workers. In the UK, there is a specially high marginal tax rate for pay between £100,000 and £125,000 a year.

The super-rich use moans about the £100,000 workers to cover themselves. But the super-rich are different. They pay much lower rates.

Zucman's plan will not bring socialism or equality or fairness. €20 billion a year is maybe 0.6% of total income. Even to refloat public services needs more taxation, including of the rich but not super-rich.

The plan would leave the super-rich holding their wealth, only contributing a portion of the 6% or so gain they get each year on each million in their stashes. The mechanism would remain by which already-accumulated wealth multiplies itself "automatically" by employing us as workers and paying us only the value of our labour-power, not the new value created by our labour.

But wage rises do not bring socialism either. We fight for them both to build working-class organisation and to gain more leeway in our lives for class-struggle activity and self-education. Without that fight, we will not even get started on battling for socialism.

Winning a Zucman tax is good for similar reasons: both to assert ourselves against the super-rich, and to get resources to refloat public services.