France’s National Assembly voted down dual proposals to tax the ultra-wealthy on Friday, dealing a blow to left-wing lawmakers who had made fiscal reform their condition for supporting Prime Minister Sébastien Lecornu’s budget.
The rejection came just days after Socialists torpedoed a separate measure by abstaining in a vote that failed by a single ballot.
Centrist, conservative, and far-right deputies formed a majority against both the Zucman tax and a Socialist alternative, approving instead a diluted government levy on holding companies that would likely generate just €1 billion annually.
The outcome threatens to unravel Lecornu’s fragile coalition, which lacks a parliamentary majority and depends on Socialist votes to survive.
Two Proposals Fall
Lawmakers rejected economist Gabriel Zucman’s proposal for a 2% annual tax on wealth exceeding €100 million, a measure that would affect roughly 1,800 households and raise between €15 billion and €20 billion per year.
The Socialist Party’s alternative, a 3% levy on assets above €10 million with exemptions for family-run and innovative businesses, met the same fate.
Zucman contends his tax would require the ultra-rich to pay at least as much proportionally as average earners. Public polling shows 86% support for the measure.
Budget Minister Amélie de Montchalin defended the government’s position during floor debate, warning that the Zucman tax could trigger an exodus of France’s wealthiest taxpayers. De Montchalin argues that policymakers should not pursue “tax justice at the expense of the economy.”
Charlie Maggi, founder and CEO of The Open World, views the rejection as evidence that lawmakers prioritize economic pragmatism over populist taxation. According to Maggi, “the rejection of both the universal tax and the Zucman wealth tax shows that France remains committed to maintaining a competitive and investor-friendly environment.”
He believes legislators “clearly want to avoid discouraging entrepreneurs and international investors who contribute to job creation and economic growth.”
Government Alternative Passes
The Assembly approved a narrower 2% tax on assets sitting in holding companies serving no economic purpose beyond reducing their owners’ tax obligations. Finance ministry officials identified approximately 4,000 such structures as potential targets.
This represents a fraction of the revenue left-wing parties sought. France faces a deficit of 5.8% of gross domestic product and a national debt standing at 114% of GDP, making it the eurozone’s third most indebted nation after Greece and Italy.
Socialist Abstention Triggers Backlash
The October 24 vote on Eric Coquerel’s “targeted universal tax” exposed fissures within the left. Coquerel, who chairs the National Assembly Finance Committee and represents La France Insoumise (LFI), proposed requiring wealthy French nationals earning above €235,500 annually to continue paying domestic taxes for a decade after relocating to lower-tax jurisdictions.
The measure failed 131 to 132 after 45 of 47 Socialist deputies abstained. LFI lawmakers accused their Socialist counterparts of cutting a deal with Lecornu’s government, dubbing it the “Faure-Lecornu pact.”
Bastien Trelcat, co-managing partner at Friedland Trelcat Bonnici, anticipated this outcome weeks before the vote.
He attributes the pattern to structural political dynamics, noting that “we are in the same situation as last year: the same amendment was added by the Budget Committee to be eventually rejected by the (same) Parliament because French non-residents traditionally vote in masses for the left-center-right parties currently in power.”
Philippe Brun, a Socialist deputy, defended his party’s abstention by challenging the amendment’s scope. Brun contends the proposal “excludes 121 countries, including all tax havens: Panama, Andorra, Monaco, Luxembourg, the British Virgin Islands,” and would apply only to “a few African countries where there is no tax exile.”
LFI deputy David Guiraud expressed frustration that the amendment fell short by a single vote. Some Rassemblement National (RN) members present that evening supported the measure, creating the unusual spectacle of far-right lawmakers voting alongside the far left on tax policy.
Implementation Challenges Compound Political Obstacles
Trelcat points to practical obstacles beyond the political gridlock. He notes that any such measure remains “subject to Double Tax Agreements, which is another huge limitation.”
He explains that enforcement would prove “very difficult to claim any monies back in practice” and warns that “litigation could take years before administrative courts.”
Lecornu Offers Concession
The prime minister responded to Socialist anger by pledging not to oppose lifting a planned freeze on pensions and welfare benefits in his 2026 budget. Under the original proposal, the government would not have adjusted these payments for inflation next year.
Socialist Party leader Olivier Faure met with Lecornu for lunch on Friday but emerged unsatisfied. Faure warned that “if the copy remains as it is today, there will be no positive vote and there will even be a vote against from the Socialists, meaning this budget will not be able to pass.”
Boris Vallaud, who leads Socialist deputies in the Assembly, frames his party’s position around equity rather than confiscation. Vallaud insists lawmakers demand “tax justice” rather than wholesale dispossession of private wealth.
Constitutional Questions Loom
Lecornu has argued that France’s Constitutional Court would strike down the Zucman tax, pointing to precedents where the court invalidated levies it deemed confiscatory. The government structured its holding company tax to withstand such scrutiny while targeting what officials characterize as purely tax-avoidance vehicles.
Pascal Saint-Amans, who led global corporate tax reform efforts at the Organization for Economic Cooperation and Development (OECD) for a decade, credits Zucman with reframing France’s fiscal debate.
Saint-Amans notes that “the merit of the Zucman tax is not the tax itself, it is the diagnosis and moving away from the idea that nothing can be done.”
Political Paralysis Deepens
The budget fight unfolds against France’s broader political dysfunction. Lecornu became the country’s fifth prime minister in two years after his predecessor, François Bayrou, survived nine months before parliament rejected his budget, calling for €44 billion in spending cuts.
Earlier this week, the Assembly voted to double the tax on global technology companies and establish a 25% minimum rate on profits earned by multinationals based on their French activities. These measures passed with broader support than the wealth tax proposals.
The legislation will advance to the Senate in the coming weeks, though the lower house retains final authority over the budget. Any version parliament approves faces review by the Constitutional Court, which maintains the power to invalidate provisions it finds unconstitutional.
Lecornu’s path narrows as Socialists signal they may withdraw support unless the government makes additional concessions. The prime minister can invoke constitutional authority to pass his budget without a vote, but doing so would trigger an automatic confidence motion that could topple his government.
