Full Breakdown
Billionaire Wealth Tax Proposals and Israel’s Low-Threshold “Trapped Profits” Surtax
8/28/2026, 8:53:05 PM
Zucman’s Global Wealth-Tax Blueprint
Professor Gabriel Zucman, an economist commissioned by the G20 in 2024, argues that billionaires currently pay far less than the average citizen—about 25 % of their income, with an average income-tax rate of only 2 %. He proposes a 2 % annual levy on the net wealth of individuals with assets of $100 million or more. Zucman estimates that such a levy could generate $300-$380 billion in annual revenue worldwide. The plan also calls for automatic international exchange of banking data and the inclusion of beneficial-ownership information in country-by-country reports to improve enforcement.
Israel’s “Trapped Profits” Surtax and Its Distinct Threshold
Beginning in 2025, Israel will apply a 2 % surtax on the prior-year “Chargeable Accumulated Profits” of closely held Israeli companies. Unlike Zucman’s $100 million wealth-tax threshold, the Israeli rule triggers at a profit level of NIS 750,000 (approximately $250,000). The surtax is waived if at least 6 % of those profits are distributed as a taxed dividend or reinvested in qualifying business assets. Additionally, current-year profits from labor-intensive activities that exceed 25 % of revenues may be attributed to shareholders and taxed at rates up to 50 %, subject to the same low-profit exemption.
Valuation Methods and Expected Revenue Impact
Zucman notes that roughly half of global billionaire wealth resides in publicly listed shares, which can be valued directly. For private holdings, he suggests using valuation multiples—profits, assets, or sales—derived from comparable listed firms in the same industry. The OECD’s 15 % corporate “top-up” tax framework, which allows one jurisdiction to collect the tax and others to claim a credit, is cited as a model for implementing the proposed 2 % wealth tax.
Implementation Challenges and Remaining Gaps
Both proposals face practical obstacles. Zucman acknowledges that tax planning will evolve in response to new rules, creating a “cat-and-mouse” dynamic. The Israeli legislation does not clarify whether family members each receive a $100 million threshold, nor does it address potential double taxation for immigrants (“olim”). Experts advise early consultation with professional advisors to navigate these ambiguities.
