Una nuova tassa per i super ricchi? La “tassa Zucman” spiegata

Good article.

Something I don’t understand about this, is they are acting as if France was living on its own bubble, the idea is great and could Indeed bring more into French Governement budget through this said tax.

But those ”elite” could just move their Investment or wealth on neighbor Countries who happen to be part of the same Economic and regulatory bloc within the EU or even go abroad.So what would they do against that ? What can they do to keep that at home despite being part of an open Economy?

On Bloomberg, 2 days ago they talked about this, like what France tried to do with a 75% tax on ”elite class” more than a decade ago and the result was many rich People taking their wealth and declaring themself abroad and some Investment stalled.

So they plan to do that again ?

Supporters of the so-called Zucman tax, such as the French left, argue that it could allow the state to collect between €10 billion and €25 billion each year.

The annual cost of debt servicing is 50-60 billion. So hardly a solution “solving” french debt

It’s going to work out beautifully. Because it’s not like the guys who can afford hordes of tax attorneys and accountants are *ever* going to find loopholes, now is it? 

Idea to tax wealth is correct, but I do not think people grasp how hard it is to get around taxing unrealized gains in stocks. Taxing premiums like cars, real estate, private jets is easy, but doing this on wealth held entirely in stocks has massive implications in the long run depending on implementation you choose.

I’ve been paying wealth tax for 7 years and I still think it’s stupid.

First of all, I don’t agree with Zucman basic assumption that ultra-wealthy households pay less taxes. Sure, thay pay less personal income taxes ‘cause they usally own companies whose dividends (which are taken from already taxed company profits) have a different but not lower taxation. In the best case scenario, € 1M of company profits before taxes means that the shareholders can cash in € 500k but, more often than not, it’s even less.

Just to make an example, in Italy corporate income tax rate is about 28% and dividends are subject to a 26% flat tax, which means a combined 46,72%; in other EU countries corporate tax rate and dividends tax rate are: DE 29,9% & 25% (= 47,43%) , FR 25,8% & 30% (= 48,06%), NL 25,8% & 24,5-31% (= 43,98-48,8%) and GB 25% & 33,75-39,35% (= 50,31-54,51%).

Therefore, the ultra-wealthy households don’t pay less taxes but different taxes whose amout is well above the average personal income tax.

However, let’s assume today is Dec. 31st, I own 100.000 shares of Facebook and I have to pay a 2% wealth tax. The current market value of my shares is USD 71,7M and this year I got a wopping 2.10 USD dividend per share, USD 210k in total. Therefore, unless I have USD 1.2M sitting in may bank account, I must sell 1.67% of my shares to pay a 2% wealth tax… oh, wait, but I bought them some years ago, so I also have to pay capital gain tax, therefore I need to sell even more shares.

This could work if – and only if – the shares’ value increases at least 2% every year or the shares have at least a price-to-dividends ratio of 2+%; the first may well be true if I pick the right shares and the market is going up, but the latter, well, in the last 50 quarters S&P 500 dividend yield has been 2+% just 10 times (and last time was Q1/2020)

Furthermore, there is plenty of side effects. First, over the time, unless the company distributes as dividends every single dime of profit, I have to sell shares and risk losing the control of a company; second, if many shareholders must sell the same shares, their price may drop; third, if the value of the share tanked for whatsoever reason, I still have to sell and take a loss (therefore, to break even their price needs to rise even more); and so on.

But what if I have the same wealth sitting in a bank account and I don’t want to invest? Interest paid by banks wouldn’t be enough to pay wealth tax so my capital decreases more and more every year. And this seems a theft more than a tax.

What if I own a non-public-traded company and, me being a wise enterpreneur, I do not distribute dividends ‘cause I want to reinvest profits to finance company’s growth? Do I have to sell shares of my company just to pay taxes? And who would buy the shares of this non-public-traded company? Last but not least, what if my company goes bankrupt after some year so I never cashed dividends or had a capital gain? Will they give me back the taxes I paid?

The last hypothesis is exactly my situation: I own a company that never evr distributed dividends, the tax law largely overvalues the company (something like the average between capital & reserves and 11 times the net profit) and I have to pay wealth tax on that overinflated value. So, every year I have to raise my salary just to pay an always rising wealth tax. Fun fact: I told to tax office I would sell’em my company with a 25% discount on the value they appraised it. Guess what? They don’t want it with a 50% discount.

So Medef wants to organize a street protest?
May I suggest Place de la Concorde as the venue?