Gabriel Zucman: "The difference between philanthropy and taxes is the difference between oligarchy and democracy"

WashingtonIn June 2026, Elon Musk became the first trillionaire in history. Never had a single person accumulated such a large fortune. Nor had there been so much talk about taxing billionaires as there is now. French economist Gabriel Zucman (39 years old) has dedicated a good part of his life to investigating how large fortunes avoid paying taxes, ending with a proposal that is "obvious": a fixed tax on the wealth of billionaires. This idea has caused the large fortunes of Silicon Valley to spend almost 400 million dollars to prevent it from becoming a real policy.

Together with economist Emmanuel Saez, Zucman, who is also a professor at the University of Berkeley, proposes a tax –to be paid only once– of 5% of their net worth for billionaires living in California. The measure went to the polls on November 3rd under the name Proposition 40, and this Monday Associated Press declared the count closed with 52% of the votes against and 47% in favor. When Zucman speaks to ARA, three days after the election and with a projection that was already pointing to no, he acknowledges that he has probably lost this battle, but considers that the billionaires have only managed to buy time: "After these elections, I have more confidence that we will end up achieving it".

Taxing the wealthiest seems to be one of the few ideas capable of generating consensus between Democratic and Republican voters, and it has been one of the recurring messages of this campaign. Prop. 40, furthermore, proposed using the revenue to mitigate cuts to medical subsidies. How is it explained that this unrest has not translated into votes?

— It is the oligarchy in action. It is not just that they poured a huge amount of money into it: almost 400 million against practically zero. They have bombarded California with misinformation, they included two measures on the ballot that were supposed to nullify the measure if it was approved. Two poison pills that were presented as proposals to protect retirement savings. There are many people who, for example, have voted in favor of the tax on billionaires, but also in favor of one of these two clauses. They even tried to buy the company that the union used to collect signatures to bring Prop. 40 to a vote.

Do you think that there may also have been errors, or a lack of political will, when communicating this proposal to the public?

— The Democratic party voted in favor of supporting Prop. 40, but later the [Democratic] governor Gavin Newsom opposed it. As the press has documented, Newsom has relationships with billionaires and is a personal friend of Sergey Brin [co-founder of Google and the tenth largest fortune in the world], and with a view to his possible 2028 presidential candidacy he is also counting on them, whether it be to finance his campaign or to ensure they do not oppose him by spending money against him. However, I do not want to overestimate or exaggerate this influence.

It is like what Musk already did in 2024 with Trump, and which he has tried to repeat again in these elections. To what extent is the accumulation of economic power without any control dangerous for democracies?

— This is the fundamental tension of democratic societies: the tension between extreme wealth, on one hand, and the very possibility of having a properly functioning democracy, on the other. After World War II, many people forgot about this a bit, because extreme wealth had reached historically low levels. But in recent years there has been an explosion: in 1987, billionaires represented 3% of global GDP; today they represent 17%. In California, the wealth of billionaires is equivalent to 50% of the state's GDP. And, with the explosion of their wealth, there has also been an explosion of their power to influence public policy, the dominant ideology, and elections. One of the main drivers of this explosion in wealth, although not the only one, is that they pay much less in taxes than the rest of the population.

And how is that explained?

— Because for some years these magnates have paid practically no income tax. They set themselves a salary of one dollar, order their companies not to distribute dividends, and do not sell shares, so they do not realize capital gains. Thus, their taxable income is tiny. It is not illegal, but there is a very serious anomaly. For billionaires to pay nothing is madness; it is radical.

Therefore, is taxation a way of placing limits on economic power within democracies?

— Without a doubt. Progressive taxation is probably the most powerful anti-oligarchic instrument we have invented in modern democracies. First of all, there is progressive income taxation. It is important: if tax rates of up to 100% are applied to the income of the wealthiest, wealth is stabilized. In this way, a certain convergence with the wealth of the rest of the population is forced. If, in addition, their assets are also taxed directly, this convergence between the wealth of billionaires and that of the rest of the population is further accelerated. Obviously, there are many other measures such as antitrust policies, or even rethinking the ownership of companies and inventing new forms of ownership, for example, in the artificial intelligence sector.

In fact, when it comes to taxing billionaires, they argue that stocks should also be considered wealth for tax purposes. Why?

— Stocks are liquid. Therefore, the distinction between the money you have in the bank and stocks, which are supposedly not a form of real wealth but rather something virtual, makes no sense. A stock is simply a financial asset that you can sell, that you can use to pay taxes or to do other things. In fact, billionaires have sold them or transferred them to political action committees to fund the campaign against the Prop. 40. If they can convert stocks into cash to spend on an election, they can also do so to pay taxes. Net worth is the value of everything you own, minus debts: stocks, cash, bonds, or property. The thing is that more than 90% of the wealth of the richest is in company stocks. That is why it suits them to say it is not real wealth, but, in fact, it is their entire net worth.

And how do we deal with the billionaires' threats to leave?

— It is true that historically it has been a significant weakness, but it must be made clear that it is a problem that exists, yes, but that it has a solution. Basically, it is a question of political will. Does taxing the rich mean that they leave for Dubai and there is nothing we can do about it? No. Everything depends on the policies we decide to implement. Currently, Spain, France, and practically all countries except the USA, stop taxing a person as soon as they leave to live in another country. But we could do it differently. For example, if a person leaves for a country with lower taxes after having lived many years in Spain or wherever, they could continue to be taxed for ten years, as it is also thanks to the country of origin that they have built their fortune. It is a question we can discuss: if you go to another country with high taxation, fine, we will not demand anything more from you. But, if you go to a tax haven, your country of origin should continue to tax you, because there is no right, by the fact of becoming a multimillionaire, to live in your own parallel society without any tax obligation. Currently, we have chosen to aggravate tax competition between countries, but tomorrow we can make different decisions.

If it is a lack of political will to tax the wealthiest, what tools should states have to do so?

— The most important thing is to have very clear rules to deal with the threat of them leaving the country and to make it very clear that you are free to leave, but that, if you do, you will continue to have the obligation to pay wealth tax. In fact, that is what Hungary will do. It establishes that, if you leave the country, you will still have to pay the wealth tax for ten years. It is interesting what is happening there because it will create a wealth tax based on this model of taxing the wealthiest. It will start to apply from a net worth of 1 billion forints, which is approximately equivalent to 3 million euros, with a rate of 1%, and then 1.5% above 300 million euros. Therefore, it really focuses on extreme wealth, without any tax loopholes. This is the future. This is the type of instrument adapted to the current situation and that incorporates the lessons of history.

Is taxation sufficient to resolve structural inequalities? No matter how much large fortunes are taxed, if other conditions such as housing do not change, the savings capacity of a large part of the population remains very limited.

— Taxation is not the solution to everything, but one of the reasons why it is so powerful is that it acts in two areas: pre-distribution and redistribution. Pre-distribution includes the various policies that contribute to making society more egalitarian before the tax system intervenes, such as public education or good infrastructure. Redistribution consists of transferring resources from the richest to the poorest. But progressive taxation also acts on the distribution of income before taxes, because it modifies the incentives to accumulate wealth. If very high marginal rates are applied to the highest incomes, as happened in the United States, it is like setting a legal limit on income. If a person knows that the government will keep almost everything they earn above a certain amount, they will have fewer incentives to continue accumulating. Therefore, it not only serves to collect money intended to finance public spending, but it also regulates inequality. And precisely, this redistribution to support essential public goods – public education, public health – has also been the main engine of economic growth and the great increase in productivity during the last century.

The housing crisis in Spain makes many people from the middle and working classes see inheritance as the only possibility of accessing an apartment, and end up opposing the inheritance tax for fear of not being able to pay it. This rejection makes them end up defending a discourse that primarily favors the upper classes.

— The inheritance tax is quite unpopular everywhere, precisely for the reason you point out. It is a perverse effect derived from the increase in inequality and the rising cost of housing: people have the feeling that, if they want their children to be able to get ahead, it is important to leave them money. If we lived in much more egalitarian societies, this would be a much smaller concern. The goal should not be to increase the inheritance tax for everyone and, undoubtedly, it should not be increased for those who receive small or modest inheritances. The priority should be for large fortunes, people with hundreds or thousands of millions of euros in assets, to pay the taxes that correspond to them. Currently, their effective tax rates are much lower than those of the middle classes. This violates the basic principle of equality before the law. It is common sense: the wealthiest people cannot pay less taxes than the middle classes. First let's resolve this anomaly and then we can consider more elaborate reforms.

Given the increase in debate, some billionaires are proposing their own redistribution formulas, such as creating a “public benefit fund,” as proposed by Anthropic, or the distribution of shares, as Musk said. Are we facing an attempt to also control the narrative on how wealth should be redistributed?

— They are not innovating. They are following the strategy of the 19th-century British aristocrats which consisted of saying: “No, you must not tax us because we will be very generous, we will give money through philanthropy and, therefore, there is no need for any kind of tax”. There is a big difference between philanthropy and taxes: it is the difference between democracy and oligarchy. With philanthropy, you decide how much money you give, to which cause, and for what purpose. With taxes, we decide collectively: we decide if the money is allocated to education, healthcare, or other services. Therefore, I believe that in this sense they are more than a century behind.