197. The Billionaire Tax Debate (Gabriel Zucman)

27:29So to put it differently, people who have 1 million, 5 million, even 10 million pounds in wealth, typically they will pay income tax. And typically the amount of personal tax that they pay relative to their wealth is more than 2%. So for them, you know, you could lower the threshold, but it wouldn't make any difference, right? Because they're already above 2%. It's really for the super rich that there is a need to create this floor because they avoid the income tax today. And let me just finish by mentioning that it's for those super rich individuals that the rise of inequality has been the most striking.

28:06You know, that wealth inequality has increased in the UK, but the wealth of billionaires has exploded. Let me just mention one number. You look at the Sunday Times Rich List. In 1989, the first year of the ranking, the 200 wealthiest families in the UK owned wealth equivalent to 5 % of the UK's GDP. meaning if they had spent their wealth they could have bought the equivalent of 5 % of all the goods and services produced in a given year in the UK today the number is 20 % so you have 200 families who could buy if they spent all their money, all their wealth they could buy a fifth of everything that's produced in a given year in the UK

28:55Rory Stewart:Gabriel, there are so many moves you're making here so many moves, so many assumptions you're making, I'm sorry Sorry. Your statement that the best way to generate productivity is investment in public education and infrastructure. Look at the competitive relationship between California, the UK, and Europe over the last 10, 15 years, the time when these guys made all the money. It would be ridiculous to say that the US made that money because of investment in public education infrastructure. In fact, their investment in public education infrastructure is much worse Western Europe on almost every indicator, right, the kind of productivity investments you're talking about, Western Europe is far better than the United States.

29:38Rory Stewart:And if that was the main driver of this growth, you would expect UK, French, German growth to be much, much stronger than the US. Where do these billionaires you're talking about in the UK, where did they come from? Where did they actually make their money? Right? So when John Fredrickson moves from Sweden to the United Kingdom, the Gini coefficient in Britain goes in the wrong direction because this massive Swedish billionaire has moved to Britain, right? He departs the country again. The Gini coefficient goes in a different direction. Has equality improved in Britain? Has anyone's lives got worse when he moves here?

30:17Rory Stewart:Has anyone's lives got worse? Now, and which brings me to the bigger question, right? What are the risks? What are the costs? What are the benefits of this proposal. So presumably you acknowledge there are some risks and your major lever is taxation. So there is some risk, you know, you think very little, but there must be some risk that some people will move. There must be some risk that your idea that you can chase them for 10 or 15 years to get their money is not going to work. There will be a legal challenge. You're not an expert on UK law or human rights law, you're not an expert on the UK budgetary process, but it seems to me perfectly possible that the Chancellor of the Exchequer announces on such and such a date, we're going to chase people for 10 or 15 years, they leave.

31:06Rory Stewart:So there's a risk. So then what is the benefit? What is the revenue that you propose to generate from this change? And what is the problem you're trying to solve? Are you trying to solve housing? Are you trying to solve income inequality? Are you trying to get Britain to be more productive? And does the problem you're trying to solve justify this risk and cost benefit calculation? Okay, that's a lot of questions. So what is the problem we are trying to solve? It's the problem that has come into light very recently when several thousand researchers have been working in partnership with tax administrations in different countries to establish how much tax the super-rich pay and how does this compare to the rest of the population.

31:57Rory Stewart:Okay, and we're talking about here the UK, not the US. So just to explain. So in the UK, the basic problem is that they are largely paying capital gains tax, which is 24%. No, that's not the problem. The problem in all countries, including the UK, is that the super rich find ways to report very little or sometimes no income. So the problem is not the rate that you apply to that income. The problem is that they report no or very low income. And how do they do that? It's because they put their wealth, which mostly corresponds to shares in companies, into holding companies, personal holding corporations.

32:45And those holding companies earn income, primarily dividends or capital gains, free from the individual income tax. They don't pay income tax on that income.

32:57Rory Stewart:They pay corporation tax. The holding companies don't pay corporation tax. What sort of tax do they pay? They're in tax hands. That's the whole problem. They're in tax. They know it's a tax. You're saying holding companies in the United Kingdom pay no tax? True. If a holding company receives dividend income from a business that it owns, then it's not going to pay tax on that dividend income. But if I can go back… It's the same in France. It's the same all across the EU. It's the same everywhere, with just one exception, which is the US, which had those debates in the 1930s when, in 1933, the New York Times revealed that J.P.

33:41Morgan had paid no income tax in 1931 and 1932. For the outrage, there was an inquiry. J.P. Morgan, the individual, the company. The individual, yes, which was one of the largest fortunes of the time. And so what they found out is that there was a systematic use of personal holding companies to avoid the individual income tax. But that was during the New Deal. And the Americans at the time, they said, that's not OK. That's not how the income tax should work. And so they created what is known as the personal holding company tax, which is a tax specifically on holding companies to discourage people from doing this type of tax avoidance.

34:21And so ever since 1937 in the US, the US billionaires, they've not been able to do this kind of tax avoidance. They have found other ways. But in the UK, in France, in all other countries where we've had studies, this problem that the US fixed in 1937 still exists today. You put your wealth in a holding company and boom, as long as the money stays in the holding company, you don't have income tax to pay. There's a consequence for that, because this is really important. What problem are we trying to solve? The consequence of that is that if you look at how much, what's the effective tax rate of the working class, all tax included, VAT, payroll taxes, everything, is going to be, depending on the country, around 30, 40, 50 % of their income.

35:10For the middle class, the effective tax rate, all tax included, increases a little bit. For the upper middle class, it increases a little bit. And that for billionaires, it collapses. It collapses 25 % in France to less than 20 % in Netherlands and so on. Let me just say, listen, most reasonable people will think that is utterly unacceptable. I guess the question is whether this is the way to address that. So I think with some of these corporations, particularly if you take tax...

35:37Rory Stewart:What are you trying to address? You're just trying to address the fact that they're not paying tax or there's some social problem you're trying to fix? So let me just finish to... This is a very important question. So what problem are we trying to fix? It is this regressivity problem that I'm trying to fix. So it's a question of fairness? It's a basic question of equality before the law. The most conservative interpretation that you can make of the principle of equality before the tax law is that wealthier people shouldn't be allowed to pay less tax relative to their income than the rest. OK, but listen, let me just make a different point.

36:18The point I was going to make is that it goes back to political will. When Gordon Brown was chancellor and prime minister, he was rightly, in my view, utterly obsessed with this issue of tax havens. OK, and I think tried very, very hard in lots of different ways to try to get around them. You've studied the tax havens. is there not something difficult about the assumption that first of all governments are going to buy into this which they have to do but also that then you won't just have more and more people finding ways around it unless actually you do get rid of any kind of competitiveness around tax because the truth is right now a lot of these people that are paying literally zero tax who i despise and you despise and lots of other people do but what they're doing is using legitimate means to put money into countries, you know, the Cayman Islands does exist.

37:09The Channel Islands do exist. You know, these places are there. So unless we're actually some, Luxembourg exists. And how do you do that within European Union? No, but, okay. So you are concerned about something else, not rich people moving abroad, rich people moving some of their wealth to a foreign country like the Cayman Islands. And to be very clear, if there was a wealth tax on the super rich, their worldwide assets would be taxable. Meaning whether the wealth is held in the UK or in the Swiss bank or in the Cayman Islands makes no difference. You have to pay the tax. So now there's a question of enforcement.

37:53Are they going to try to hide their wealth? And the good news is that a lot has happened since Gordon Brown, because in 2018, we've created an automatic exchange of bank information between countries. It's not very well known, but it is, in my view, the most important advance in international economic cooperation of the last two decades. Before that, there was a complete bank secrecy in Switzerland and other places. Very easy for rich people to hide their wealth. Rampant tax evasion. A huge problem. Since 2018, all the banks in all tax havens have to automatically report to HMRC on the wealth of their UK customers and the income that they earn each year.

38:41I'm not saying it works perfectly well, that there is full compliance. But don't get me wrong. It's been a game changer. And we see that in the data. We see a ton of wealth, which previously was hidden, which shows up in tax returns. We see a lot of income abroad that shows up. We've studied that in different countries, including Denmark. So it makes it much easier today to enforce a wealth tax on the super rich than 10 years. Okay.

39:08Rory Stewart:So to return, so we were talking about risks. I think we disagree on the risks of whether they will move or not. No, no, no. I mean, it's a risk. It all depends on how the law is written. If the law says you can move and after you've moved, we don't tax you anymore, then I agree with you. It's a big risk. I agree with you. But that's not my proposal. The proposal is not, don't write the law like that. Add a paragraph that says if you move, we keep taxing you after you've moved. So there's no incentive to move. So the risk then, there's a second risk, which is that you can't write the law in that way, that it's difficult to write retrospective laws of that sort.

39:43Rory Stewart:Okay, so let's say you're the Swedish billionaire and you move to Britain. Suddenly, Gabrielle stands up in the House of Commons and says, you're trapped. Either you pay for 10 or 15 years or you were made here. You're not going to be able to leave this country. I wonder whether you will be able to do that quickly enough to prevent them leaving, which has been a problem in California, or secondly, whether there won't be legal challenges. So I think there is a risk there. So let me try to answer that question because I've actually studied the UK tax law. And you already have something like that in the UK law for inheritance tax.

40:18There is what is known as a tail, which means that if you move to another country for 10 years and you die abroad, for a period of 10 years, you still have to pay inheritance tax in the UK. That's already in UK law. My proposal is just to extend that logic, to also apply that logic of having a tail or trailing tax to this minimum tax on the super-rich. But the legal basis already exists in the UK tax law.

40:51Rory Stewart:Okay, so we can come back to the question of whether they will leave before this happens. But what I'm trying to say is, let's say there's a risk. What is the financial benefit of doing this? How much you calculating this is going to generate some revenue for the government compared to the potential risks? Okay, so how much money are we talking about? So first of all, there is a great deal of opacity and the wealth of the super rich. So you have to be careful. It's difficult to have a pretty precise estimate. There's a margin of error. The estimates that we have are based on the Sunday Times Magazine Rich List.

41:30Perhaps they overestimate the wealth of the super rich. Perhaps they underestimate the mismo very rich people. Let's take those numbers as given. And if you can calculate is that the wealth of UK residents who have more than 100 million pounds adds up in total to about 25 % of GDP. So that's the tax base. 25 % of GDP. You apply a 2 % rate. UK citizens or UK residents? No, residents. Just the residents. So it's excluding those who have already moved, who live in Monaco.

42:05Rory Stewart:But it's including many people who are not UK citizens who chose to move to the UK. The tax would apply to residents, even non-citizens. What matters is residents. If you take the residents in the Sunday Times Rich List, the base is 25 % of GDP. They pay almost no income tax today. And so you apply 2 % to that base and you get 2 % times 25 % tax revenue of 0.5 % of GDP. That's the ballpark number. I want to emphasize that there is a margin of error for the reasons that I mentioned. 0.5%, that's about 15 billion pounds per year. So I want to be very clear that this is not enough to fix the UK's public finance problems, to invest in education, in the energy transition.

42:50It's not enough, but it's also not negligible. And I think many people are approaching those debates with a somewhat outdated view, dating back to 1980s, 1990s, prior to the explosion of extreme wealth. and the prevailing view at the time was like, okay, perhaps the billionaires don't pay a lot of tax, but they are so few in number that it doesn't really matter from a public finance perspective. And that view might have been true at the time, but today is just not true anymore because the flip side of the explosion of the wealth of the super rich is that now you have this big tax base of 25 % of GDP.

43:30And for comparison, look, Look, Kirsten famously tried to get 1.5 billion pounds by scrapping fuel allowances for retirees. 1.5 billion. Here we're talking 10 times more money, 15 billion, from just roughly 1 ,000 families who pay very low tax today. Because it's only applying to not only those who are extremely wealthy, but those among the super rich who avoid taxation today. So it's the fairest and the most targeted tax that you can think of.

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45:56Rory Stewart:and make it yours.

46:04You use a phrase in your book, and I love your audacity at having this book that is so short. This is the latest thing that's got this debate going. And I know there's a story behind that. But there's a lot of content. There's a lot of content. It's very interesting to read, but there's a line in there where you talk about we have an unfinished revolution. Yes. Okay. and here we are in Paris, scene of one of the greatest revolutions of all time. I think there is a genuine worry about the extent to which democracy becomes undermined as this gap goes on and on and on and gets bigger and bigger and we don't seem to be able to close it.

46:42In answer to your point, Rory, I think it is partly about fairness but it's also about the sense of everyone feeling that they're part of the same economy and the same society and they now feel we have these people in a different universe. So two questions really and the first one relates to this, It seems to me that a lot of the people you're talking about, and we've mentioned two or three of them, Musk and Bezos and these guys, they feel that because of the wealth that they have, they actually have more power than people with power, the politicians. This is the risk, the democracy, that the politicians now have no power.

47:15So is it not possible that actually it's going to take another revolution before this gets fixed? I want to be very clear about the fact that it's not a 2 % tax on billionaire wealth that's going to be remotely enough to reduce the concentration of wealth and hence the concentration of power. The 2 % tax, the proposal in the book, it addresses another problem. It addresses this tax injustice issue. But it's not fixing this other problem, which is in many ways a bigger problem, which is that with the explosion of the wealth of billionaires who've had an explosion of their power, the power to influence markets, the power to influence the prevailing ideology by buying media companies, the power to buy elections, to influence policymaking, and so on.

48:06And there is always a fundamental tension in democratic societies between extreme wealth on the one hand and the very possibility of a well-functioning democracy on the other hand. It's a very serious problem that all the thinkers of democracy have written about all the way back to Aristotle, to someone like Lea Yippe at the Lomond School of Economics today. It is, in my view, probably the most important problem or challenge that we're going to face in the 21st century. Do you think that governments, in a way, or government as we understand it, has become incapable of making the decisions with popular support?

48:53Because there's something extraordinary about the extent to which poor people, at the moment, in a lot of countries, poor people are voting to put into power people who pride themselves in saying, I can beat the system. They don't pay that much tax. Trump's a great example of that. But most people, the vast majority, actually want to tax billionaires. Polling that's been done everywhere in the world shows tremendous support. In France, it's like 86 % of the population that favours the 2 % minimum. And yet they're voting for parties that actually will work against those interests. Yes, but also because there's no party on the other side of the spectrum that's actually proposing to enact those things of very few parties.

49:35So, you know, that's the problem we have.

49:38Rory Stewart:So, listen, I agree with you, right? It is disgusting that these people are so wealthy. They don't need the money. It's ridiculous, right? What is the point of having$1 trillion? Why are they not taking any income? Well, they're not actually spending very much money compared to the money they've had. They're just accumulating wealth and power. It's ludicrous. And their power is disgusting. And inequality is disgusting, right? And as you say, the fundamental problem is actually we're not talking about real inequality. We're not talking about Africa. We're not talking about living in global extreme poverty there.

50:08Rory Stewart:But what I worry about with this is that we're putting a lot of different things that we are angry about, disgusted about, worried about from different countries, different contexts together. And the reason why everybody loves it is we hate Elon Musk with reason. Maybe you don't. I do. I don't like Elon Musk. We think it's ridiculous that they have all this money. It's absurd. We think it's unjust that they don't pay tax. We feel inequality is rising. But then you say, so why is no party doing it? So anybody listening to this is like, well, this is crazy. Why don't they just listen to Gabriel?

50:45Rory Stewart:He's got this obvious answer to it. The reason why they don't do it, of course, is they disagree. So let me try to be there and try to explain why the Conservative Party doesn't do it, why the Labour Party doesn't do it, why Lib Dems don't do it. In fact, why only the Green Party in Britain is flirting with this idea. And the answer is that I imagine most people in the Labour Party would agree with Alistair, right? They're horrified by inequality. They're disgusted by these bananas. What they would say is cost, benefit, risk. The benefit that you're talking about is potentially something like one hundredth of the government budget, you know, one percent of the UK's budget that you're talking about.

51:29So the question the Treasury would ask you or Labour would ask you or Andy Burnham would ask you if the Swiss Andy Burnham is thinking here is, is it worth doing this for the possible upside of 1 % of the budget?

51:42Rory Stewart:And why don't they do it? And they might say, listen, there's other things I might want to do. I might want to put capital gains tax up. It's very, very strange in Britain that if Alistair and I go and invest in shares, we pay 24 % on our share income, but we pay 45 % on our income. So we might want to equalize CGT and income. Absolutely. This might be a better thing to do. It's not either or. Okay, it could do better. Great. Their anxiety is just at the moment where Britain is really struggling economically, where an AI tech revolution is taking place, where we are trying to be the most pro-business, pro-friendly, pro-tech country in the world.

52:21Rory Stewart:When America is roaring ahead, is the message we want to pass to the world for the sake of 1 % of the government budget, if you come from Sweden or the United States and you move to Britain, you're trapped. You're not going anywhere. We're going to tax you for the next 15 years of your life. You're trapped just like people are trapped in the US because the US has citizenship taxation. If you become a US citizen with all the benefits of US citizenship, and you can choose to do that, and many people don't take US citizenship for that reason, you're not proposing that. You're not saying British citizens would pay this.

52:59Rory Stewart:If you did it just to British citizens, you would get very little money. What I'm saying is that the U.S. has had this citizenship-based taxation. You cannot avoid it. And they are worse. America is worse, much worse on every indicator with the billionaires. The billionaires own a bigger proportion of GDP. They pay less tax. Oh, yeah, sure. So, yes, OK, U.S. does citizenship, U.S. does holding companies. These are not the models. I think what's interesting in the case of the U.S. is that there's been enormous change in U.S. tax policy over the course of the 20th century. And you can look at how this has correlated with growth and innovation and productivity in the U.S.

53:41So remember that for half of the 20th century, between the 1930s and the late 1970s, the top marginal income tax rate in the U.S. on average was 78%. There was a long period of time during World War II, after World War II, when it was more than 90%. There's a famous speech by Franklin Roosevelt in Congress in 1942, where he says, look, I think that no American should have an income after paying taxes of more than$25 ,000 of the time, equivalent to$2 million today. Hence, I propose to create a 100 % tax on all incomes above$25 ,000. And they nearly did it. They did 94%. And it's really not far from 100%.

54:26And this was the policy of the U.S. under FDR and Truman and Eisenhower and so on. Did it destroy economic growth? No. Growth was higher in those decades than it's been since the 1980s. Did it destroy innovation? Did it destroy U.S. capitalism? Not at all. Investment rates were higher in those decades than they've been since the 1980s. What has happened since the 1980s is they've done the opposite, right? They used to have the most progressive tax system in the world, and they went all in in the opposite direction. What's been the consequence of that? Macroeconomic growth has declined very substantially.

55:06It was 2 % per year on average between 1946 and 1980. It's been 1.4%. It's not a high number. People think that there's been a growth miracle in the U.S. since Reagan. No, 1.4 % per year in growth since 1980. And not only growth has declined, but it has become very unequally distributed. For the working class, incomes have nearly stagnated. For the super-rich, there's been an explosion, a dramatic explosion of their income and their wealth, to such an extent that today, the wealth of, I don't know how you want to call them, the oligarchs, the top 0, 0, 0, 1 % wealthiest Americans, is equivalent to 14 % of U.S.

55:50GDP. It was 3 % at the height of the Gilded Age in 1900, in 1910. So these are levels of concentration that have skyrocketed, that come with enormous forms of plutocratic capture on the U.S. federal government. We saw that when Musk had almost a candidate position with total freedom to slash spending that he didn't like with the so-called Department of Government efficiency, DOGE. So, look, the macroeconomic record of the U.S. since 1980, since the Reagan experiment, is not good. The main consequence that this has had has been an explosion of inequality with very worrying, in fact, dramatic, catastrophic consequences for not only U.S.

56:41democracy, but for the world, frankly. because when they destroy U.S. aid, this implies millions of deaths, including of children of less than five years old, all around the world. So really catastrophic consequences for us. No, we agree on that. As we are in France, can I just take your pulse on the French political scene right now? Because here we are talking about ideas that I think a lot of people on the left of French politics will think, yep, this is the way to go. And on the right. of voters. 86 % of the population is in favour. This is not a left-right thing. But it's a left-right thing with the party.

57:20In Parliament, yes. There's a disconnect between the popular and democratic support and demand and what's currently being legislated. My point is that you've got the left that would be broadly supportive of what you were saying. You've got people like Le Pen and Bardella who would be against, even if some of their voters are in favour. And yet, it's hard to see at the moment. I know a lot can happen. There's a long time, well, there's not that long, but it's next year, the presidential election. The hard right looks closer to power than it's ever done in France. I think the fact that the far right came out very strongly against this proposal is actually going to harm them a lot.

58:00And for some time, they tried to maintain some kind of ambiguity, saying we're not in favour, but we recognise that there are problems with the tax system. And then the debates that we had, in particular in the fall, last year in France, forced them to clarify what they stand for. And they said, look, we think that the billionaires are untouchable. If we tried to tax them, they would leave. It would be like shooting ourselves in the foot. We're not going to do that. We have to accept that there's going to be a law that's more lenient for the super rich and the powerful and harsher for the poor, for immigrants, for the rest of the population.

58:40That's their view. It's very clear. It's a very clear view. But it's a view that most people find appalling. Most people, they want equality before the law. They don't accept. It is such a fundamental dimension of what it means to live in a democracy, of what it means to live with the rule of law. The law has to be the same. And the fact that those super rich people might threaten to live or to hide assets, That shouldn't serve as an excuse for saying, fine, you're free to live in your own parallel society and not contribute like the rest of the population. That's just not acceptable. Look, I agree with that.

59:19But do you think that the right now, let's just get back to the broader political question, is your sense that they are going to be in power here? What's your sense right now where French politics lies? I think it depends a lot on what the debate is going to be about. So if we talk more about issues like this, how do we fix our inequality problems, our tax problems, then I think the right and the far right has to offer, it's very weak and it's not popular and they will lose. Now, if the left is divided and is not kind of talking enough about those questions, then we talk about other things, about immigration, about what have you, and the right, the far right has a chance to win.

59:59Rory Stewart:I'm trying to understand how serious you are about stating, for example, that 94 % tax has no impact. That this story of FDR, 94 % tax, nobody can only have a two million dollars. I think it has a slight positive impact. Positive impact. Slightly positive. Slightly positive. So you would endorse it then? Yes, I think the lesson, we can study the historical experience of the US. And of course, it's difficult to know how the US economy would have evolved with a different tax policy. So what the counterfactual is. Okay, so we have to be careful. But what we can know as a fact is that when the US had this policy of quasi-confiscatory, top marginal income tax rates for really wealthy, very wealthy people, and they did for income tax, but also for inheritance tax with rates of nearly 80%, What happened?

1:00:55It didn't kill growth. In fact, growth was higher back then than it is today. It had a dramatic effect on inequality. It reduced inequality a lot. That's when level of income and wealth concentrations in the US reached their historical minimum. And so I look like many other economists at that experience. It seems like growth was strong, investment was strong, and there was much more equality.

1:01:21Rory Stewart:So to clarify, you would favor a 94 % income tax and an 80 % inheritance tax, and you believe it would have no impact on growth. In fact, it would be much more positive. This is, I mean, this is not what you would favor today. Why not? Because the problem with our income tax is that billionaires report no of their little income. And we're not going to fix that problem with 90 % top margin income tax rates. who are going to fix that problem with some kind of tax that's based on wealth. I think the main limitation of the U.S. or also British experiment with highly progressive income and estate taxation during the 20th century is that it never tried to address that issue, perhaps also for good reasons, because extreme wealth had largely disappeared after World War II.

1:02:14And so the question of how much income tax those people would pay was not really relevant. But now extreme wealth is making a comeback. So we need to invent. My proposal is not to say, let's do what was done in the past. It was OK. Let's kind of repeat old recipes. That's not that. The situation in 2026 is very different than the situation in 1950. We have trillionaires. We have booming billionaire wealth. They pay no income tax. Now the challenge is how do we fix that product?

1:02:42Rory Stewart:But Gabriel, the normal story you give is do it all. put up capital gains tax, put up inheritance tax, put up income tax, do the wealth tax. Why not? What's the downside on doing it all? What's the disadvantage of having 94 % income tax, 80 % inheritance tax? Why not? Why not? You know, why not? I think my reading of the historical experience is that those Roosevelt-type top marginal income tax rates were not bad policy. Well, a net, probably a net positive because what it does is that it's not using taxation for redistribution. It's not taking money from the rich to fund transfers for the poor.

1:03:24It's not that. It's changing the distribution of market income or pre-distribution, the distribution of income before tax. What I mean is that it's changing the incentives for people to try to earn extraordinarily high incomes. And I think, you know, what it did is that it contributed to boosting wage growth for the middle class, for the working class. It curbed the various forms of rent extraction that you can observe when, on the margin, any extra dollar that you make above$10 million,$100 million, you keep almost all of it. Well, okay, people who are motivated by earning one extra million in income above 100 million, many of them, many of these forms of income earning processes, they are not very positive.

1:04:15some. You know, this is income that's earned at the expense of, could be shareholders, could be consumers, could be workers. That's income that's earned by exerting monopoly power or that's income that's earned because you are going to bargain for yourself as a CEO, a super high compensation package that has been to mean less money for shareholders, less money for workers. So those sky high incomes, by and large, or I think the historical record suggests that by and large, there are zero sum for society. Finalement, pour nous aider à attirer des écouteurs français, en français, une minute pour lui convaincre que vous avez raison et il a tort.

1:05:03D 'accord. Il y a une injustice fundamental in our fiscal system contemporaneous. This injustice is that the billionaires don't pay or almost no impetus on the income. It's a violation of the fundamental principle of equality against the law. And the most logical way to solve this problem, is to create a minimum impetus, a minimum impetus on the very big fortune equal to 2 % of the income for the ultra-riches.

1:05:36Rory Stewart:Bien sûr. Convacue? Non. Mais merci. I tried. I tried my best. It was very elegant, though. And it was such a wonderful French idealistic language. I loved it. The fundamental principle, as I said. Thank you. Thank you so much. Thank you so much. Thank you. Merci bien.

1:05:54Rory Stewart:So what do you think of Gabriel Zuckman there? You know, he's got it all. It's actually, he was praising 96 % income tax, huge inheritance taxes. I was with him quite a long part of the journey. If we just wind back a bit, we interviewed Gary Stevenson a while back, and he'd just met, I think, Gabriel Zutman, and he'd been to Paris to see the work that he was doing on how you actually formulate a wealth tax. And he was adamant, this guy shows how this can be done and how a government can do it. Now, I am absolutely persuaded of the importance of inequality as an issue. I'm absolutely persuaded that it's getting worse, not better.

1:06:34I have something close to contempt for people who see the pursuit of their own personal wealth as the only thing that matters in the world. I'm still not sure how this operates in practice other than in a very idealistic world. And the trouble with politics, particularly today, is it's not very idealistic. So, and I saw you were more sympathetic towards these arguments, probably until he did get to that point of essentially saying, however high you put the tax rate, I don't really care.

1:07:06Rory Stewart:One of the things that was so striking about that is that it's very much about principles, fairness, rules. If you really wanted to push him, and I didn't get the chance to do that, is say, would you do this even if it didn't raise more revenue? I mean, is it that you basically just think it's unjust that rich people should pay less tax, largely because they own a lot of shares, they've taken their money and they've invested it in shares, and they pay capital gains tax, in the case of the UK, rather than income tax? Would you go after them just to make things fairer, even if it meant less money for the exchequer?

1:07:44Rory Stewart:And I suspect he probably would. And I think it's a question maybe for Zach Plansky, might be a question for Gary Stevenson. Is this a practical policy where you genuinely want to get into an argument whether that's going to raise more money for the NHS, whether it's going to lead to more growth? In which case, there's a lot of people out there who are going to be disagreeing with you. Definitely, certainly the Treasury mainstream thinks this would be insane. but also even countries like Sweden, which a lot of us admire, abandoned these types of taxes and concluded these were real drags on growth?

1:08:21Rory Stewart:Or is it just a statement, we don't care how much damage it does to the economy, we think this is the right thing to do because we don't think there should be very wretched people, which is fine, but it's a very different type of argument. I like a good idealist and also he is clever. He's smart and I think the work he did earlier on in his career on tax evasion is incredibly important. I think tax evasion and the industry that surrounds it is appalling. And we have kind of just let it grow and grow and grow and grow. I watched The Rest is Money interview with Dan Needle. And Dan Needle, who I think has got, you know, a lot going for him, and he's very, very clever and understands tax, but he was utterly dismissive of this.

1:09:00He basically says, this is like fantasy football with tax. It's just absolutely ridiculous. I thought Steph McGovern made a really good point. He says, look, he's not a politician. he's somebody who's got an idea and he's trying to make that idea go mainstream which is what gary steven's trying to do you know tax wealth not work and so that's an i think that's an

1:09:19Rory Stewart:important contribution to our debate well my challenge to you and to to listeners on the left is are you prepared to let us do a good interview with dan needle to put the more mainstream view or are we only interested in hearing the idealistic view so i think we should get down on because, and I don't want to repeat his arguments, but it's very tempting in politics to imagine that there is some radical switch that you can hit, which is going to sort everything out. And that, of course, is what's being offered here by Gabriel Zuckman, which is the idea that there is something that you could do, which is effectively ramping up the taxes on the rich and then trapping them in the country by saying that if you try to leave, we're going to imprison you and chase you for 10 or 15 years, which is suddenly going to turn everything around.

1:10:06Rory Stewart:Not quite saying that. Presumably the answer actually, I guess, but maybe this is just me as a small C conservative, is that actually really making our countries better is about making our institutions better. You know, the really hard work of the head teacher and the teachers making a school better, making a prison better, really getting our defence procurement sorted out. It isn't that there's some magic thing that nobody's thought of hanging in the back of somebody's pocket, which if only you introduced it, everything would be better. I think that is a real reason why people experimented with wealth taxes and got rid of them.

1:10:41Rory Stewart:And I'd like somebody to come in and explain that before everybody gets excited with the idea that there's some magic move that can be made. Yeah, I don't think it is a magic move, but I think it's an interesting part of the inequality debate. And I think we'll power to his elbow in terms of getting that across. I don't think it's going to happen anytime soon in any of the major economies. But, you know, it's quite something to have a tax named after you. Malcolm Turnbull, in the interview with him, talked about the Giddens paradox. Anthony Giddens has a paradox. Zuckman has a tax. Yeah, what have you got, Rory Stewart?

1:11:17Podcast. Well, we've got Alistair Campbell's concept of percivilliance. Ah, we do have that. We do have that. Thank you so much for reminding me. Anyway, there we are. Thank you, Gabrielle. and I thought his very, very short pitch in French was in a way more compelling. It's certainly true. And it was certainly much more elegant. On est très reconnaissant de la présence de Gabriel Zuckmann et son taxe. Voilà.

1:11:42Rory Stewart:Merci à vous. Au revoir. À la prochaine. À bientôt. À la prochaine.

1:12:03Hello, The Rest is Politics listeners. It's Gordon and David here from The Rest is Classify,

1:12:08Rory Stewart:and we've got an exclusive preview of our latest series on the poisoning of Alexander Litvinenko. A Russian security service officer is living in London with his wife and son when he suddenly falls seriously ill. He has been poisoned using a rare and highly radioactive toxin. But who gave the orders and why? In our latest series, we investigate the mysterious murder of former KGB officer Alexander Litvinenko. In a sinister plot that goes all the way to the top of the Russian state, we delve into the murky circumstances leading up to Litvinenko's death and how foreign agents pulled off an audacious murder on British soil, one which put the entire population of London in serious danger.

1:12:53This is a story of personal tragedy and of cloak and dagger espionage, but also political

1:13:00Rory Stewart:conspiracy. Litvinenko's murder sheds light on the cost of speaking out in Putin's Russia, but also the extent to which the British state has been willing to suppress the truth to maintain its political relationships. To hear the full series, listen to The Rest is Classified wherever you get your podcasts. Thank you.