Taxing the ultra-rich, an idea gaining ground

While European companies, trade unions, NGOs, politicians and economists would like to see increased taxation of the extremely rich, governments are more reluctant.

Published On: March 28th, 2024


On 28 February, at a meeting of G20 finance ministers in São Paulo, Bruno Le Maire took a clear stand in favor of implementing a global minimum tax on the very wealthy. “Currently the richest people can avoid paying the same level of tax as other people who are less rich. We want to avoid such tax optimisation”, declared the Minister. Before adding: “We want Europe to take this idea of minimum taxation of individuals forward as quickly as possible, and France will be at the forefront.”

This is good news for all those in favor of more sensible taxation of the least taxed segment of the French and European population, namely the very rich. Though it has to be said, this comes from a minister who, after having abolished the wealth tax, continually states his refusal to raise taxes. Thus, his commitment might simply seem like the best way to postpone such a tax for several years, until the G20 countries reach an agreement.

Under debate throughout Europe 

If the Minister was keen to speak out on the subject, it’s because it’s the subject of an ongoing debate in France. From economists and trade unions to certain political forces and NGOs, the need to tax the most wealthy forms part of France’s democratic discourse. In early March, Olivier Blanchard, former chief economist of the International Monetary Fund (IMF), lent his support to the cause, which continues to arouse passion across the country.

In Germany, too, the idea of higher taxation of the very wealthy has been on the agenda for several years. The SPD (Chancellor Olaf Scholz’s Social Democratic party) has long supported the measure, and a poll conducted a few years ago showed that 72 percent of Germans were in favor. Reiner Hoffmann, the powerful head of the DGB trade union, also spoke out on the subject, stating that “the reintroduction of a wealth tax is more urgent than ever”. Economists with an influence on public and political debate, such as Marcel Fratzscher, President of the DIW economic research institute, have also shown their support for a move in this direction.

Any attempt by Germany’s current coalition government to implement such a tax policy is blocked, however, by the presence of the FDP, the liberal party whose very purpose is to represent wealthy Germans. Christian Lindner, the Finance Minister, is an FDP politician. And he plays an important political role in both the Bundestag and the Kabinett. He has the power to veto any decision that has budgetary implications. His public stance on the subject is very clear: “Germany cannot afford to implement a wealth tax.” That’s that, then. But the idea will no doubt reemerge in next year’s general election campaign, given the mounting debate across Europe.

In Italy, it’s the government as a whole that disapproves of the idea. In fact, Deputy Economy Minister Maurizio Leo has made it clear that, after initial tax cuts for those at the lower end of the income scale, he intends to continue the movement to “reconfirm the reduction in rates”, particularly for the highest income bracket (who pay 43%).

Meanwhile, a study by Oxfam Italy shows that the total wealth in the hands of the country’s three richest billionaires amounts to more than that held by the six million poorest Italians. In other words, three people own more wealth than 10 percent of the population. So, when Emanuele Felice, an economist, historian and professor at the Libera Università di Lingue e Comunicazione (IULM) with close ties to the Democratic Party, was asked whether he supported the European proposal to tax the most wealthy, the response could not have more direct: “Of course I support it! We are facing major challenges, first and foremost the ecological transition, which must be socially just, and to this end we need money that must come from the richest.” But, explains Francesco Saraceno, economist at the Observatoire français des conjonctures économiques (OFCE) and professor at the Libera Università Internazionale degli Studi Sociali (Luiss), “this is not at all a theme that’s being discussed at the moment”. However, various polls conducted in recent years show that two-thirds of Italians support higher taxation of the most wealthy.

Conversely, the debate on taxing the ultra-rich has become increasingly vigorous in Belgium in recent years. In 2023, a survey carried out by the Centre national de coopération et de développement (CNCD) in collaboration with the media outlet Le vif revealed that 80 percent of those polled were in favor of a specific tax on wealth over 1 million euro. And for many years now, the two main trade unions, the Confédération des syndicats chrétiens (CSC) and the Fédération générale du travail de Belgique (FGTB), have been in favor of such a tax.

The issue has largely been taken up by politicians. Paul Magnette’s Socialist Party, one of the driving forces behind the European initiative to tax the rich, is of course at the forefront, as is the Belgian Labor Party. As one of its members, MEP Marc Botenga, explains, “We prefer to talk about a tax on wealth rather than on assets. We want to hit large fortunes, not small assets or incomes”. Admittedly, within the broad governing coalition, the subject is a matter of debate between the different parties. That’s why “we’re advocating for the measure at European level”, says Marc Botenga.

The Spanish exception

Spain is a clear exception in the European context. Pedro Sánchez’s government passed a temporary solidarity tax on large fortunes at the end of 2022, which is supposed to apply only to the 2022 and 2023 tax years, for fortunes in excess of 3.7 million euros, at a rate of 3.5%. However, the government may decide to extend the measure. Spain was one of the last European countries (along with Norway and Switzerland) to have a regional wealth tax, which is now supplemented by a national tax.

Notwithstanding the diversity of individual countries, the British and Irish situations confirm that governments are reluctant to tax the ultra-rich on a national basis, while companies, trade unions and many economists are in favor. The mobilization of European citizens seems all the more important as it will encourage the European Commission to put forward proposals, especially now that Joe Biden has declared, in early March, that he is in favor of further taxing the very rich. By taking up this issue, the G20 is taking a necessary step towards global action. Good news indeed.

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