Zucman Backs a Hungarian Wealth Tax that Targets Millionaires 

Economist Gabriel Zucman has voiced support for Hungary’s proposed wealth tax that would reach people worth about $3 million USD.  

Le Monde reported on October 18 that Zucman traveled to Budapest to advise the new Hungarian government on a wealth tax. According to Reuters, the proposal announced by Prime Minister Péter Magyar would apply to wealth above 1 billion Hungarian HUF, equivalent to about $3.08 million at the time of the October 6 report.  

Under Hungary’s draft, an annual 1 percent tax would apply to net wealth above the 1 billion HUF allowance, with a 1.5 percent top rate for the largest taxable fortunes. Residents’ business holdings, investments, real estate, and assets abroad would generally count, after permitted deductions and exclusions. First payments would be due in 2027. The proposal remains under review following public consultation. 

Zucman has never settled on the level of wealth that must be taxed. In Hungary it’s 1 percent on wealth greater than $3 million, in France it’s a 2 percent tax on wealth greater than $115 million (€100 million), in the UK it’s 2 percent on $130 million (£100 million). His famous Global Wealth Tax targets billionaires, but adds that “extending the tax to centi-millionaires would generate an additional $100-$140 billion.”  

The Hungarian proposal has the lowest threshold of any wealth tax endorsed by Zucman yet. An individual can easily cross this threshold by building a valuable business, even if they never see that wealth in cash. The tax effectively turns business ownership into a recurring liability, regardless of whether the owner actually receives enough income in a given year to pay the bill. 

Pásztor Szabolcs, research director at the Oeconomus Economic Research Foundation, based in Hungary, identifies the central problem: “The most problematic element of the proposal is that it taxes accumulated net wealth rather than realized income.” 

Szabolcs describes an entrepreneur possessing 5 billion HUF in net wealth, mostly tied up in a manufacturing company. Applying the proposed 1% rate to the 4 billion HUF exceeding the allowance results in an annual tax bill of 40 million HUF, before any credits or relief. Consequently, even if the company generates no distributable profit that year, the owner would still owe this wealth tax. 

To find the cash, the owner might seek dividends, borrow, or sell part of the business. Historically, responses to wealth taxes included changing the asset mix, reducing the tax base, or migrating to a jurisdiction with a more competitive tax environment. The draft provides for payment relief in cases of liquidity difficulty, but postponing a bill does not eliminate the underlying obligation. Selling existing shares does not automatically remove money from a company; however, extracting additional dividends can leave less available for reinvestment. 

Hungary’s own Finance Ministry acknowledges this risk. Its impact assessment says the tax could encourage some owners of micro, small, and medium-sized businesses to pay larger dividends, possibly hindering their investment. It also identifies possible effects on taxpayers’ financing, investment, and residency decisions. These are risks recognized by the government proposing the tax. 

Reuters reported a projected Hungarian budget deficit of 7.5 percent of GDP for 2026. Yet, the government projects to raise only .2% of GDP from the tax, a static estimate. Researchers modeling the Global, California, and France wealth taxes find they cause more losses to GDP, income, and jobs than Zucman’s revenue projections.  

A durable fiscal response must begin with spending discipline and policies that encourage investment. Pásztor argues that “Hungary’s priority should be to reduce structural expenditure pressures and raise its long-term growth potential rather than rely on a narrow tax imposed on accumulated private capital.” His proposed alternatives include reviewing public procurement and administrative costs, phasing out ineffective subsidies, and making regulation more predictable. 

Hungary’s proposal shows that Zucman is willing to support a wealth tax that would apply well below dollar-billionaire fortunes. Policymakers should reject a recurring tax that creates cash demands on business owners and risks diverting resources from productive investment.