The French economist advocating California’s billionaire tax should regard his homeland as a cautionary example.
French economist Gabriel Zucman arrives in California bearing a familiar French remedy for a budgetary challenge: another tax.
Formerly affiliated with the University of California, Berkeley, Zucman has returned to push Proposition 40, proposing what he describes as a one-off 5 percent levy on the net worth of residents with fortunes exceeding $1 billion. As a co-author, he contends the measure could bring in roughly $100 billion, with about 90 percent earmarked for health care.
The California Legislative Analyst’s Office urges caution, projecting only tens of billions and warning that it might trigger a sustained drop in income tax receipts as affluent residents depart the state along with their firms.
I have argued repeatedly that wealth taxes are economically harmful, administratively burdensome, and unlikely to deliver on promises. Yet Zucman’s approach is flawed for an even deeper reason, as demonstrated by his homeland: taxing more to fund ever-expanding government ambitions tends toward catastrophe.
If you haven’t been isolated in a cave recently, you will have noticed the demonstrations and turmoil in France. But do you understand the cause?
To borrow the observation of another economist, Paul Krugman, from 2017: “France provides a welfare net beyond the wildest dreams of U.S. progressives: universal, high-quality health care for all, generous paid leave for new parents, universal pre-K, and much more.”
For decades, France has responded to every perceived demand with government spending, then tackled the resulting fiscal strain by seeking new revenue streams. Today, French government outlays consume roughly 58 percent of gross domestic product (GDP).
Krugman once boasted that France wasn’t weathering social collapse and suggested that spending was to blame for its resilience. He cannot claim that any longer. In fact, he now fears France may stand at the edge of a debt crisis. The truth is that France has struggled for some time, even when Krugman praised its spending.
Among the protesters today, young people have faced prolonged unemployment. France’s youth unemployment rate (ages 15-24) has stayed between 17 percent and 27 percent since 2000. In the second quarter of 2026 it stood at 21.6 percent, compared with 14.8 percent in the euro area and 9.9 percent in the United States.
French citizens also shoulder some of the highest tax burdens among developed nations, and they are dissatisfied with what they receive. The state already takes more than 52 percent of the nation’s GDP in revenue, runs deficits above 5 percent of GDP, and has accumulated debt approaching 120 percent of GDP. Yet students insist that schools are underfunded, while many can see that the army and police are also being shortchanged.
The students’ concerns aren’t unfounded. On The Two Cents Substack, Hoover Institution scholar Hanno Lustig notes that from 1995 to 2024, spending on social protection and health (largely benefiting the elderly) rose from 53.1 percent to 58.7 percent of total French government outlays. The share allocated to education, defense, and public order fell from 15.2 percent to 13.7 percent. Transportation dropped from 5.3 percent to 3.8 percent.
In short, France has built an expansive welfare state, much of it oriented toward older citizens, while allowing other state capacities and essential services to deteriorate. As wealth transfers swallow a larger slice of the budget, everything else gets squeezed.
That is the fiscal ratchet Californians should fear when Zucman argues that Proposition 40 is necessary to “save” health care. Proponents claim Washington has “cut” Medicaid, but that framing is misleading. California’s deficit existed long before any federal spending reductions. Moreover, federal Medicaid outlays aren’t declining—by no means. The Congressional Budget Office projects Medicaid to reach $708 billion in 2026, an 8 percent rise from 2025. What the 2025 budget reconciliation did was slow Medicaid’s future growth relative to earlier projections, partly by tweaking eligibility and enrollment rules and financing structures.
This is how the ratchet functions. Once government projects a spending increase, any shortfall is described as a cut. And when Washington doesn’t fund the entire projected rise, Californians are told that Sacramento must cover the missing money. And how should that be accomplished? Conveniently, through the creation of a brand-new tax.
France has pursued this route for decades. It maintains an exceedingly generous welfare state financed by steep taxes; it has even experimented with a wealth tax and a value-added tax, yet scarcity persists. Its welfare state has not eliminated shortages. It has merely shifted the task of rationing scarce resources onto politicians.
Zucman looks at California and envisions hundreds of billions in private wealth ready to fix a public-finance problem. Californians should instead cast their eyes across the Atlantic and ask a different question: what follows when politicians decide that every spending adjustment can be postponed by tapping another reserve of private wealth?
France should not be dispensing tax guidance to California. It should be issuing a warning.
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