The Architect Of The Billionaire Tax Makes His Case — ft. Gabriel Zucman

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**Ed Elson** (1:36)
Welcome to Prof G Markets. At the height of the Gilded Age, the top 0.00001% held wealth equivalent to 4% of the nation's GDP. Today, that number has tripled to 14%.
By this measurement, wealth inequality is three times worse in America than the Gilded Age peak. Our guest today has spent nearly two decades trying to understand how we got here. French economist Gabriel Zucman has mapped wealth concentration and traced fortunes through tax havens, trying to figure out how the world's richest accumulated so much wealth so fast. Gabriel is the founder and director of the International Tax Observatory and also author of the book We Need To Tax Billionaires. He advises policy makers around the world on how to tax wealth. Most recently, he helped design California's proposed billionaire tax, which voters will consider in November. In France, he even has a tax named after him, although it has yet to pass. So we wanted to ask him how wealth got this concentrated, what it would take to reverse this trend, and whether a wealth tax is actually the answer. Here is our conversation with Gabriel Zucman. Gabriel, thank you so much for joining us on the show today. I just want to start with a pretty basic question. We've seen some of the inequality statistics.
How bad is it and how did we get here?

**Gabriel Zucman** (3:05)
Thanks a lot and thanks for having me.
One of the most striking evolution of the world economy of the last decades has been the explosion of billionaire wealth, of extreme wealth. Perhaps one number, if you take a global perspective, global billionaires owned wealth equivalent to 3% of world GDP in 1987, which is the first year of the Forbes ranking of global billionaires. And today, their wealth is equivalent to 17% of world GDP. So we are talking about broadly 3,000 families who, if they spent their wealth, they could buy 17% of the value of all the goods and services produced in a given year globally. And we see this trend everywhere. We see it at the global level. We see it in France, in Europe, and we see it in the US. It's been even stronger in the US, where billionaires own wealth that's equivalent to 30% of US GDP, and even more in California. California, California billionaires have wealth equivalent to 50% of California's GDP. We see this upsurge in extreme wealth. There are different reasons, there are different factors behind this evolution.
One that has been very important has been the dramatic changes in taxation since the 1980s, especially in a country like the US, which used to have one of the most, if not the most progressive tax system in the world in the middle of the 20th century with corporate tax rates of 50%, with top marginal income tax rates of almost 100%, 90% on the highest earners, with top estate tax rates of nearly 80%.
That was the reality in the US between the 1930s and the early 1980s. And then went all the way in the opposite direction in the 1980s. To take just one example, when Ronald Reagan entered the White House in 1981, the top marginal income tax rates for the highest earners in the US was 70%, which was at the time the highest among industrialized countries in the world. And then in 1986, there is the big Reagan tax reform and the top marginal tax rate is reduced to 28%, which at the time was the lowest among industrialized countries. So in just five years, it is very radical and profound transformation. And there's many reasons to believe that this has been one, not the only, but one of the main engines behind the rise of income and wealth concentration globally and the particularly fast rise of inequality in the US.