Posted on 10/22/2026 4:08:50 PM PDT by sopo
French economist Gabriel Zucman has come to California bearing a familiar French solution to a fiscal problem: another tax.
Once based at the University of California, Berkeley, Zucman is back and campaigning for Proposition 40, which would impose an allegedly one-time 5 percent tax on the net worth of Californians worth more than $1 billion. Zucman, who coauthored the proposition, estimates that the tax could raise about $100 billion and claims that 90 percent of the proceeds would go to health care.
The California Legislative Analyst's office is far more cautious, saying it would raise only "tens of billions" and could cause a long-term loss of income-tax revenue as wealthy people leave the state with the companies they created.
I've written plenty about why wealth taxes are economically destructive, administratively nightmarish, and unlikely to achieve anything close to what their advocates promise. But Zucman's prescription is wrong for a more fundamental reason, as his (and my) native country shows: Raising taxes to fuel ever-larger demands for government spending is a recipe for disaster.
Unless you've been living in a remote cave recently, you've likely seen all the protests and destruction in France. But do you know why it's happening?
As another economist, Paul Krugman, rightly noted back in 2017, "France offers a social safety net beyond the wildest dreams of U.S. progressives: guaranteed high-quality health care for all, generous paid leave for new parents, universal pre-K, and much more."
For decades, France has answered any perceived desire with government spending, then responded to the resulting fiscal problem by seeking new revenue sources. Today, French government spending consumes roughly 58 percent of gross domestic product (GDP).
Krugman gloated that France wasn't suffering social collapse and speculated that it was due to all the spending. He certainly can't say that anymore. In fact, he is now worried that France may be on the precipice of a debt crisis. The truth is that France hasn't done well for some time, even when Krugman cheered its spending.
One of the groups in the street today, young people, has faced widespread unemployment for a long time. The youth unemployment rate in France (ages 15-24) has hovered between 17 percent and 27 percent since 2000. In the second quarter of 2026, it was 21.6 percent, against 14.8 percent in the Eurozone and 9.9 percent in the U.S.
French people also pay some of the highest taxes in the developed world, and they're not happy with the return. The government already takes more than 52 percent of the country's output in revenue, runs deficits exceeding 5 percent of GDP, and has accumulated debt approaching 120 percent of GDP. Nonetheless, French students complain that the government is shortchanging schools, while everyone sees that it is shortchanging its army and police.
The students aren't wrong to feel left out. At The Two Cents Substack, Hoover Institution scholar Hanno Lustig calculates that, between 1995 and 2024, spending on social protection and health (most of which benefits older people) rose from 53.1 percent to 58.7 percent of all French government spending. The share devoted to education, defense, and public order fell from 15.2 percent to 13.7 percent. Transportation fell from 5.3 percent to 3.8 percent.
In other words, France has built an enormous welfare state, much of it devoted to older citizens, while letting other state capacities and basic services fall apart. As transfers of wealth swallow a larger share of the budget, everything else gets squeezed.
That is the fiscal ratchet Californians should worry about when Zucman tells them Proposition 40 is necessary to "save" health care. Proponents claim Washington "cut" Medicaid, but that language is misleading. California's deficit started long before any Washington spending reductions. Besides, federal Medicaid spending isn't falling—not even close. The Congressional Budget Office estimates it will reach $708 billion in 2026, 8 percent more than in 2025. What Washington did in the 2025 budget reconciliation law was reduce Medicaid's future growth relative to previous projections, partly by changing eligibility and enrollment rules and financing arrangements.
This is how the ratchet works. Once the government projects a spending increase, anything less becomes a cut. And once Washington fails to finance the entire projected increase, Californians are told that Sacramento must backfill the missing money. And how should it do that? Conveniently, by creating an entirely new tax.
France has run this experiment for decades. It has an incredibly generous welfare state paid for with very high taxes; it's even tried a wealth tax and has a value-added tax, yet somehow it's never enough. Its welfare state has not eliminated scarcity. It has merely transferred the job of rationing scarce resources to politicians.
Zucman looks at California and sees hundreds of billions of dollars of private wealth waiting to solve a public finance problem. Californians should look across the Atlantic and ask a different question: What happens after politicians decide that every spending adjustment can be delayed until tomorrow by finding another pot of private wealth?
France should not be sending California tax advice. It should be sending a warning.
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For decades, France has answered any perceived desire with government spending, then responded to the resulting fiscal problem by seeking new revenue sources. Today, French government spending consumes roughly 58 percent of gross domestic product (GDP).
Krugman gloated that France wasn't suffering social collapse and speculated that it was due to all the spending. He certainly can't say that anymore. In fact, he is now worried that France may be on the precipice of a debt crisis. The truth is that France hasn't done well for some time, even when Krugman cheered its spending.
It sounds like the French could have destroyed themselves even without Allah’s blessings
California, like France, has a large welfare population.
“California accounts for roughly 12% of the U.S. population, but holds a disproportionate share of national welfare rolls, partly due to more generous state eligibility thresholds, such as Broad-Based Categorical Eligibility which allows households up to 200% of the federal poverty level to qualify for assistance.”
What the economic illiterates do not understand is that wealth is portable - billionaires are moving out of the state:
“Seven billionaires have publicly left California before the January 1, 2026, residency cutoff for the proposed 5% wealth tax (Proposition 40).
These departures removed approximately $540 billion in wealth from the potential tax base.”
What will the socialists do? Move the threshold for the tax down to “millionaires” and continue down from there.
The only thing I like about Krugman is that he enables me to say that I have a better grasp of economics than a Nobel prize winner in economics.
Wealth tax has been proven costly and ineffective as it is usually easy to avoid.
As such it is rare and raises very little net money, often it is net looser for the government.
“But do you know why it’s happening?”
Do you know WHO is doing the rioting? What an idiot.
I’ve paid school tax, directly or indirectly for 47 years, I expect the full amount of Social Security in return.
I will have to pay school tax in the coming years too.
About 97% of French doctors accept the standard tariff.
American doctors would have coronaries if they saw the tariff.
Yeah, well that’s the poison crop growing on the dunghill of a dis-spirited native population
Monsieur Vieux may get the pills, but all French benefit from drug development.
I AM FAR FROM A BILLIONAIRE—_BUT CALIF TAXES DROVE ME OUT
DUE TO OVERLAPPING OWNERSHIP/MY PURCHASES & AN INHERITANCE/
I HAVE OWNED 4 HOUSES SINCE MY FIRST PURCHASE IN 1966 AT AGE 26. #1=29 YEARS #2=16 YEARS #3==21 YEARS INHERITANCE—25 YEARS...
I HAVE PAID OVER 91 YEARS OF PROPERTY TAXES —AM NOW 86.
NEVER HAD ANY KIDS.
HAVE PAID ALOT IN SCHOOL TAXES THAT I NEVER BENEFITED FROM.
BOUGHT FIRST HOUSE AT AGE 26.
NOW 86
IN 60 YEARS, I HAVE PAID 91 YEARS OF PROPERTY TAXES.
It is the unseen and unreported that has the greatest effect—all the wealthy living elsewhere who will decide not to move to California—despite the great weather.
Taxes destroy events that have not even happened yet.
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