Forum newsletter: A Tax Against Excessive Power?

Dear friends and colleagues,

When last summer in Germany people spent weeks arguing over the supposedly epochal question of how to sanction those who receive citizen’s benefit without wanting to work, skeptics pointed out that such refusals are in fact exceptions — and that cutting benefits would neither create many jobs nor generate significant revenue for the state. “Still,” proponents of tougher citizen’s benefit rules countered, people would see it as unfair.

All the more striking, then, is how rarely this fairness argument is invoked when it comes to taxing very wealthy individuals who, thanks to sophisticated tax planning, often pay little or no tax on their assets — and thus contribute correspondingly little to the construction of roads, kindergartens or universities in their country. Surveys show that a majority of people disapprove of this situation, across party lines. “It would do us in the CDU well not to look for gaps in fairness only when it comes to Bürgergeld,” said Dennis Radtke, head of the CDU’s workers’ wing, just recently. France appears to be a step ahead in this regard.

A key role has been played by Paris-based inequality researcher Gabriel Zucman, whom we featured this week on our New Economy Short Cut — in conversation with Jens Südekum, chief economic adviser to Germany’s finance minister. Zucman’s proposal for a minimum tax on fortunes of €100 million or more — now known worldwide as the “Zucman tax” — was passed by France’s National Assembly in 2025, only to be temporarily blocked by the Senate.

How did this approval come about after so many years of taboo? Much likely has to do with the fact that Zucman’s proposal seeks to address earlier concerns and design flaws of wealth taxes: under his plan, there would be no loopholes; those affected would continue to be taxed for at least a few years at the rates of their country of origin if they move abroad; and the tax would be moderate for people who truly no longer need to worry about making ends meet.

Would it really be possible to continue taxing wealthy individuals once they live abroad, Jens Südekum asked. This has long been practiced by the United States, replied Zucman, who also teaches in California. In other words: it can be done — and the period could, for example, be limited to five years.

According to Zucman, the growing support for such a tax also reflects the sharpening of inequality itself: in France, the 500 richest people owned wealth equivalent to around ten percent of GDP in 2010; today, that figure has risen to 42 percent of annual economic output. Accordingly, what portion of that wealth is taxed has become increasingly relevant for the state budget.

Another factor is that people are becoming ever more aware of the power extreme wealth confers. In France, ultra-rich individuals now own influential media outlets, which they use to shape politics.

Elon Musk, too, may have unintentionally demonstrated in 2025 just how dangerous the concentration of wealth can be for a democracy — quite apart from the fact that, unlike the occasional misuse of welfare benefits, such concentration is also economically hard to justify and largely unproductive. Vast sums of money remain unused in ways that would benefit society elsewhere.

One caveat remains, Zucman himself concedes: even a minimum tax of two percent would do little to fundamentally alter these conditions — that is, the tendency for the gap between rich and poor to continue widening. After all, the wealthiest earn average returns of around six percent; giving up two percent will still allow their fortunes to grow — while doing little to enrich those who have little or nothing on which returns can be earned in the first place.

The full one-hour conversation between Gabriel Zucman and Jens Südekum on New Economy Short Cut can be found ​here​.

Have a wonderful weekend 

Thomas Fricke 

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