The Estate Tax Gap
The Math Zucman Isn't Showing You
The Core Problem
Zucman's entire analysis compares his 2% proposal to 0%. But billionaires don't pay 0%. They pay 40% estate tax at death. This isn't an oversight. It's a fundamental gap that changes everything.
When you add 2% annually ON TOP of 40% at death, the combined effective rate exceeds 70%. That's not "finally making billionaires pay their fair share." That's cumulative double taxation presented as a modest reform.
What's Being Ignored
United States
40%
Federal estate tax on amounts over $15M exemption (OBBBA 2025, permanent)
United Kingdom
40%
Inheritance tax on estates over £325,000 (freeze extended to 2030)
France
45%
Progressive rates up to 45% for direct heirs
These taxes exist. They will be paid. Any honest analysis of "billionaire taxation" must account for them.
The Double-Dip Visualized
Current System (Status Quo)
During Life
0% annual wealth tax
At Death
40% Estate Tax
Total Effective Rate: ~40%
Zucman Proposal (As Presented)
During Life (20 years)
2% per year = ~36% cumulative
At Death
40% Estate Tax (still applies!)
Total Effective Rate: ~71-76%
The 2% compounds each year, reducing the base. Then estate tax takes 40% of what remains. The combined effect: government takes more than 3/4 of the wealth.
The Present Value Problem
Even if you believe higher taxes on billionaires are justified, the analysis should be honest. Here's what NPV (Net Present Value) analysis reveals:
What is NPV?
A dollar received today is worth more than a dollar received in 20 years. NPV converts future payments to "today's dollars" for fair comparison.
This is Finance 101. Every corporate decision uses NPV.
Why It Matters Here
Annual wealth tax payments arrive immediately. Estate taxes are deferred for decades. To the government, earlier money is worth more.
This timing advantage is being double-counted.
The "Fair" Rate
Our analysis shows the NPV-equivalent annual rate (the rate that gives government the same present value as estate taxes alone) is typically 2.3-2.5%. This means Zucman's 2% actually gives government less than current estate taxes in present value terms. So why add estate taxes on top? That 2.3-2.5% assumes a 3% discount rate, which was a fair choice in December 2025 and is not the bond market's choice now. At 4.25% the honest replacement rate is 2.00%, and at 5.25% it is 1.79%. The higher the government's own borrowing cost, the less a future estate tax is worth today, and the lower the annual rate that honestly replaces it.
The Logical Possibilities
Option A
2% annual tax replaces estate tax
(Government gets slightly less in NPV)
Option B
2.5% annual tax replaces estate tax
(Government gets same NPV)
Zucman Proposal
2% annual tax plus estate tax
(Government gets ~2x in NPV)
Why This Matters
For Policy Debate
Honest debate requires honest numbers. Presenting 2% as "modest" while hiding that it comes on top of 40% is misleading. Voters deserve to know the true combined rate they're supporting.
For Implementation
Confiscatory rates create perverse incentives. Capital flight, aggressive tax planning, and constitutional challenges all become more likely when effective rates exceed what people think they're voting for.
A Better Approach
The Mellani Proposal Alternative
What if billionaires could voluntarily accelerate their estate tax payments, receiving dollar-for-dollar credits against their eventual estate tax liability? Government gets money sooner (higher NPV). Taxpayer avoids double taxation.
Learn about the Mellani Proposal approach →Run Your Own Analysis
Don't take our word for it. Use the calculator to see the exact impact with your own assumptions. Compare all four scenarios side by side.