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[ Repub ] The Zucman Tax: When the Levy Breaks

The left never tires of pulling a new economist from its hat to peddle some idiotic non-solution. It's not wealth that should be taxed — it's the collateral pledged to banks to finance lifestyle.

Pascal Clérotte

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The 2027 presidential campaign is now underway, in case you hadn't noticed. A swarm of candidates are busy outdoing each other with increasingly deranged platforms — while carefully avoiding the actual problems. Take the latest round of riots and looting after PSG's victory yesterday. The response? Not arresting rioters or stopping them from burning things down — no, let's authorize algorithmic surveillance instead. Not cutting state spending — let's go after social benefits. The left, for its part, won't examine the root causes of fiscal injustice. It will simply parrot Gabriel Zucman's claim that French citizens are not equal before the law — which is flatly false in terms of tax law. What is accurate is that tax law has been partly engineered to benefit the wealthy.

We are republishing our article from September 23, 2025, in which we dismantled Zucman’s nonsense — which is a symptom of the left’s endemic hypocrisy.

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The French left is forever in search of the next Jacques Attali.

Its latest discovery: Gabriel Zucman, a doe-eyed little darling who has declared himself profoundly traumatized by Jean-Marie Le Pen’s accession to the 2002 presidential runoff. That event, he tells us, shaped his entire academic and political mission: to ensure it never happens again. An endeavor in which he modestly concedes he has failed so far. We will show why he will keep failing — and why that was always inevitable.

This French left — as bourgeois as it is intellectually bankrupt and morally dishonest (so is the French right)— has always needed to anoint “intellectuals” who supposedly possess the truth and hold the cure for all of society’s ills. Fifteen years ago it was Thomas Piketty. Magical thinking — proclaiming cause-and-effect relationships between events or actions without any logical basis — is a drug French politicians simply cannot quit.

For the record: Zucman’s doctoral supervisor was Thomas Piketty. His research is funded in part by George Soros’s Open Society Foundation. He is actively involved in drafting the Socialist Party’s economic program, and is close to Raphaël Glucksmann.

This magical thinking allows a left without voters to acertian that power is always its rightful inheritance — even though it bears primary responsibility for the country’s catastrophic state since Mitterrand and Delors made their hard-right-to-austerity pivot in 1983. (Though the French right, arguably the most stupid right-wing political class in the world, did nothing to purge or reform a system from which it gorged itself just as shamelessly. Nobody, it goes without saying, wants to touch the state’s lavish lifestyle.)

What matters is that nothing must change. That France continues to spend €1.5 billion so that a handful of hipsters can swim in the Seine. That it pours hundreds of billions into wind energy so that well-connected cronies can stuff themselves through the manufactured creation of a market that is unprofitable and without any energetic, industrial, economic, or environmental justification. That it persists in disbursing — with zero oversight and zero economic efficiency — nearly €250 billion a year in corporate subsidies, because when the state directs the economy, what you get is incompetent senior bureaucrats and corrupt politicians presiding over a system of sinecures, clientelism, and cronyism.

And here walks Gabriel Zucman, conjured from the hat like a magic rabbit, with his tax that will — by the grace of the Holy Spirit — undo forty-plus years of catastrophic public management and the colossal transfers of public wealth into private pockets that such management conveniently conceals. Hallelujah! All our problems, starting with the disastrous state of public finances, are solved! Hosanna in the highest!

So what exactly is the Zucman Tax?

In the name of fiscal justice, it would impose a minimum floor tax of 2% on the net worth of households or individuals whose fortune exceeds €100 million. Why €100 million and not €50 million or €10 million? A mystery wrapped in an enigma wrapped in a press release.

The Zucman Tax is, in reality, a tax on asset valuation — because income from those assets (rent, dividends, interest) and capital gains realized on their sale are already taxed. It is a perfectly idiotic measure that will improve fiscal fairness not one iota and that does not begin to address the actual problem, which this bourgeois, hypocritical — in short, neoliberal — left (and right) goes out of its way to obscure.

The moral (and therefore demagogic) argument underpinning the Zucman Tax is that the ultra-wealthy — as we have taken to calling them in France — multiplied their fortunes by 9.4 between 2003 and 2023. Yet financial markets during the same period merely tripled in value. By what dark sorcery, by what sleight of hand, is this possible?

Through what are known as Lombard loans and leverage effects. Because banks only lend to the rich.

Here is how it works.

Suppose you own a rental property portfolio worth €10 million, generating a gross yield of 5% per year — €500,000 before taxes and charges. You visit your bank and request a €5 million, 10-year loan to buy additional properties, on the grounds that the additional rental income will cover the repayments. This is called leverage. The bank agrees, taking part of your existing portfolio as collateral, at a current rate of around 3% per year.

Now imagine that your property portfolio is held by a société civile immobilière (SCI — a French real-estate holding company), of which you are the principal partner. Instead of pledging part of your property as collateral, you pledge your shares in the SCI — you use these moveable assets as security. The bank will then grant you what is called a Lombard loan, at a rate comparable to a mortgage, not on the total value of the pledged shares but on a portion thereof. This loan will be structured as an in fine loan — meaning the capital is repaid in full at maturity rather than amortized over the loan’s duration. Interest is paid annually on the full borrowed amount. You retain full ownership of the pledged shares and continue to receive the income they generate. And unlike a standard property loan, which must be used exclusively for a real-estate purchase, a Lombard loan carries no earmarking requirement. You spend it however you like.

Now imagine you lend the €5 million from your Lombard loan to your SCI in the form of a partner’s current account contribution, remunerated at 5% per year. Your SCI, in turn, goes to the bank and borrows €10 million to expand its rental portfolio — investing a total of €15 million: the €5 million you lent it (treated as equity) plus the €10 million it borrowed. In simplified terms, you have multiplied your effective asset base by 2.5, and your SCI pays the interest on your Lombard loan.

Now go one layer deeper. Suppose your SCI shares are not held directly by you but by a personal holding company — a company whose sole purpose is to hold stakes in other companies. You lend the €5 million from your Lombard loan (secured against some of your holding’s shares) to the holding company as a partner account contribution. The holding lends €2.5 million to the SCI, which borrows another €7.5 million to develop its rental activities. The remaining €2.5 million? Your holding might lend it to a subsidiary created expressly to acquire and commercially operate a yacht or private plane. And all the while, you benefit from the tax advantages of the holding structure, and the interest on your companies’ debts are deductible charges, reducing their corporate tax liability. Base your holding in Luxembourg — an EU member state — and you pay no tax at all.

Do you see where this is heading?

Replicate this structure in a context where, for nearly twenty years, Western central banks created money at full throttle to preserve bank and market liquidity — remember that the 2008 crisis was first and foremost a US dollar liquidity crisis — all at near-zero or even negative interest rates; and bear in mind that banks have a pressing commercial need to lend and will only lend to people who already have money. You will then understand perfectly how the wealthy, by pledging, multiplied their fortunes ninefold over twenty years.

When you possess substantial assets, it is far more advantageous to live on credit without touching your capital, since borrowed funds used to finance your lifestyle are not taxable. But at some point, you may object, the Lombard loan comes due and must be repaid. Certainly — by taking out a new Lombard loan, since you never touched your capital in the first place.

The Zucman Tax is therefore not merely misguided — it is a monument to misdirection.

It is not the valuation of assets that needs to be taxed. It is the financial operations that render those assets liquid without encumbering them.

The 2% should be levied on loans granted by banks on the basis of collateral pledged by private individuals or their personal holding companies. Because it is precisely these loans that finance the lifestyles of the “ultra-rich,” who have remarkably little taxable income. And then there would be no logical reason to set a floor at €100 million: 2% on every pledging operation, every Lombard loan, contracted in France or abroad. If fiscal justice is the goal, you won’t find a better instrument.

But the bourgeois French left taking aim at banks and the private investment industry — the very heart of the problem? Surely you jest. In France, bankers vote left. It’s the insurers who vote right.

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