07-07-2025
Tax on ultra-rich: 'France has the opportunity to lead the way,' say Nobel Prize-winning economists
This op-ed was signed by Daron Acemoglu (MIT), 2024 Nobel Prize in Economics; George Akerlof (Georgetown), 2001 Nobel Prize in Economics; Abhijit Banerjee (MIT), 2019 Nobel Prize in Economics; Esther Duflo (Collège de France and MIT), 2019 Nobel Prize in Economics; Simon Johnson (MIT), 2024 Nobel Prize in Economics; Paul Krugman (CUNY), 2008 Nobel Prize in Economics; Joseph Stiglitz (Columbia), 2001 Nobel Prize in Economics.
They have never been so wealthy and yet contribute little, relative to their ability to pay, to the public coffers: From Bernard Arnault to Elon Musk, billionaires have lower tax rates than the average taxpayer.
Pioneering research conducted in partnership with tax authorities in several countries demonstrates it: Ultra-wealthy individuals pay around 0% to 0.6% of their wealth in individual income tax – around 0.6% in a country like the United States and 0.1% in a country like France.
When including all other mandatory levies (corporate taxes, social security contributions, consumption taxes, etc.) and expressing their tax payments as a fraction of income, their effective tax rates turn out to be lower than those of middle-class or upper-middle-class taxpayers.
How did we get here? In short, because the ultra-wealthy can easily structure their wealth to avoid income tax, which is supposed to be the cornerstone of tax justice. In European countries, this optimization is achieved through the creation of family holding companies, in which dividends accumulate sheltered from taxation. In the US, the use of holding companies to dodge taxes has been prohibited since the 1930s, which explains why the wealthy are more heavily taxed there than in Europe – though some have still managed to find workarounds.
Fortunately, this situation is not the result of a natural law or some ancient fate: It stems from human decisions and political choices. There is no inevitability here. Not only is it necessary to impose a stronger burden of justice on billionaires, but more importantly, it is possible.
