Recently, the think tank Progressive Lab presented research findings conducted on its behalf by About People in five EU countries on the challenges to Democracy. Among the factors negatively affecting democracy, in Greece the most significant negative factor is the belief that government decisions are decisively influenced by large economic interests (29.1%). The Greeks share a similar view with the French (29.3%) and the Romanians (28.8%).
The consolidation of this view in countries with different democratic traditions, at a time of challenges to Democracy with the strengthening of far-right parties, compels us to seek ways to limit the interfering power of the economically strong in politics. One proposal put forward by Gabriel Zuckman in his book "Billionaires don't pay income tax, but we can stop them" (Polis editions) is to impose a threshold tax on billionaires, who in the case of France pay – proportionally to their income – two times less tax than the average French person. The tax he proposes applies to those with assets over 100 million and would pay 2% on the net value of their assets.
In this way, a strong message is sent to all citizens that the ultra-rich also contribute to tax revenues – since income taxation fails in their case – in order to finance the social state, which faces enormous challenges.
In the public debate, many arguments have been raised against this tax regarding its potential fiscal benefit and growth prospects.
The counterargument is that the ultra-rich will leave, depriving the country of resources to finance innovative investments. Zuckman has countered that they should be considered tax liable in the country where they were active for a reasonable period if they move to a country with more favorable taxation. However, this discussion also has a strong political dimension beyond the fiscal and developmental one. Excessive concentration of wealth allows a very few individuals to influence elections. A characteristic example is Elon Musk, who bought X and made it available to Trump's campaign. Billionaires can fund think tanks to promote views that favor them. They can influence public opinion through the media they control.
A tax like the one proposed by Zuckman can limit the political power of the ultra-rich relative to the vote of the ordinary citizen. At a time when the middle class in Greece is under pressure from overtaxation due to the non-indexation of the income tax scale, taxing the ultra-rich sends a message that economic policy does not succumb to the interests of the few. In the case of Greece, a study by Q. Parinello, G. Varaschin and G. Zuckman showed that the threshold tax could yield about 1 billion euros.
The opposing view argues that political influence should be addressed through stricter laws on party funding and influence firms.
The perception that the ultra-rich pay a lower effective tax rate than their employees fuels populism and the devaluation of politics in the minds of citizens. The main benefit of the Zuckman tax is not the tax revenue, but the political message that no individual can be considered stronger than the state itself and democratic institutions.
Filippos Sachinidis is a former Minister of Finance.
