On Thursday, 11 December, Members of the European Parliament (MEPs) discussed the taxation of ultra-high-net-worth individuals, which falls within a broader initiative to enhance the fairness of tax systems. This hearing, organised by the Parliament’s subcommittee on tax matters, included testimony from experts representing the European Commission, the OECD, the EU Tax Observatory, and the Tax Foundation Europe.
The speakers provided an overview of the current situation and proposed strategies to improve the taxation of affluent individuals. Several experts voiced concerns about the inequity of allowing wealthy individuals to effectively exempt themselves from the social contract that applies to all citizens.
Notably, Gabriel Zucman of the EU Tax Observatory advocated implementing a minimum tax on extreme wealth, suggesting it could yield approximately €67 billion annually if EU citizens with assets exceeding €100 million were taxed at a 2% rate.
Conversely, Michael Christl of the Tax Foundation Europe cautioned that introducing new taxes on affluent individuals could lead to disinvestment and capital flight. He recommended focusing on enhancing the efficiency and transparency of the existing tax system instead.
The MEPs expressed a range of opinions regarding the most effective approach. Some members requested additional empirical evidence to substantiate the claim that wealthy individuals would relocate quickly in response to new tax measures. Others emphasised the importance of balancing social equity with ensuring Europe remains competitive and attractive for investment. Furthermore, calls were made for the European Commission to formulate proposals through the enhanced cooperation procedure.
At the end of the hearing, the Chair of the subcommittee, Pasquale Tridico (The Left, IT) said, “The EU continues to grapple with deep inequalities across our societies and faces major challenges in mobilising the resources needed to finance its policies. At today’s public hearing, the EU Tax Observatory presented a study highlighting serious concerns about the effectiveness of net-wealth taxes adopted thus far by individual Member States in tackling the vast fortunes concentrated among a small number of citizens. These shortcomings stem from exemptions, erosion of tax bases, and the ease of wealth mobility. New proposals, including the one put forward by Mr Zucman, should be considered to address these weaknesses and offer a credible solution at the European level. The EU urgently needs uniform and equitable tax rules that foster sustainable growth and strengthen competitiveness. For this reason, I reiterate the call on the European Commission to present a legislative proposal to confront this pressing issue.”