Last year’s Republican tax bill, the self-styled Big Beautiful Bill, continued a decades‑long trend in which the top 1 percent have seen their tax burdens decline steadily from the high levels of the mid-twentieth century.

Since tax-cutting became the raison d’être of the Republican Party in the 1980s, the tax rate paid by the richest Americans has fallen sharply. According to research by economists Gabriel Zucman and Emmanuel Saez, during the postwar era — when top marginal income tax rates hovered between 70 percent and 91 percent, and the statutory rate on corporate profits ranged from 48 percent to 52 percent — the wealthiest households paid an effective rate of around 50 percent. Today, they pay about half that.

The further up the economic pyramid one goes, the more the effective tax rate tends to decline. In a paper published last summer, Zucman and Saez found that the total effective tax rate paid by the four hundred richest Americans now averages 23.8 percent — down from an already low 30 percent before the Trump tax cuts were first passed in 2018. In addition to lower marginal income tax rates, the drop in the corporate tax to its lowest level since before World War II cut the top four hundred’s tax payments by roughly one‑third.

The richest of America’s oligarchs — Elon Musk, Larry Ellison, Mark Zuckerberg, Jeff Bezos — typically pay the lowest rates of all, often going years without paying a single dollar in any income taxes.

While declining tax rates for the top 1 percent largely reflect forty years of Republican tax cuts and other policy changes, members of the top 0.01 percent like Musk and Zuckerberg avoid paying taxes because most of their actual income comes from asset appreciation, which is untaxable as long as gains remain unofficial. The so-called realization requirement is what enables the ultrarich to pay hardly any taxes even as their paper net worth soars into the stratosphere. Instead of selling assets to fund their lavish lifestyles, many billionaires simply take out nontaxable loans against their appreciating assets, following the “buy, borrow, die” strategy that was first spotlighted by ProPublica in 2021.

David Gamage, a scholar of tax law and policy at the University of Missouri, told Jacobin that studies find that “approximately three-quarters of the true economic income (or wealth accumulation) of very wealthy American taxpayers will never be subject to the federal or state income taxes or estate or gift taxes.”

Taxing the Rich vs. Taxing the Richest

Most Americans agree that the very wealthy — particularly billionaires — should pay a lot more in taxes. Polls consistently demonstrate a broad support for progressive taxation and a widespread belief that the superrich don’t come anywhere close to paying their fair share. A majority of Americans now also see billionaires as a threat to democracy and support efforts to rein in the increasingly powerful class. According to the Harris Poll’s latest annual survey on billionaires, more than half of Americans now even support limiting wealth accumulation — up seven points from 2024.

This growing distrust and anger toward the billionaire class has reignited the push for higher taxes on the wealthy. Across the country, calls to “tax the rich” have resonated with voters and propelled young populists like Zohran Mamdani and James Talarico to victory. Yet taxing the richest is a lot trickier than simply taxing the rich (that is, the top 1 percent of earners who rake in over a million dollars in income each year). Raising taxes on high earners is politically contentious but technically simple. Figuring out how to tax billionaires, whose wealth largely accumulates as unrealized gains that the existing tax code was never designed to reach, is a more difficult challenge.

Two proposed solutions have gained traction in recent years. The more wonkish approach is to simply tax the unrealized gains of the ultrawealthy as they accumulate each year. This option was favored by the Biden administration, which proposed a Billionaire Minimum Income Tax that would have imposed a minimum 25 percent tax on the total income — including unrealized gains — of those with a net worth over $100 million. To put this in perspective, Musk, whose paper net worth soared by nearly $200 billion last year, would have been on the hook for almost $50 billion in taxes if the Joe Biden proposal had been in place.

While the tax on unrealized gains — what experts call a mark-to-market tax — might have a slightly better chance at holding up in the federal courts (it is arguably a tax on income, after all), the more straightforward and populist option is to simply tax the wealth of billionaires.

The latter approach has recently gained political momentum at both the state and national levels. Last November, the SEIU-United Healthcare Workers West union introduced a ballot initiative in California to levy a one‑time 5 percent tax on the state’s roughly two hundred billionaire residents. Crafted specifically to offset the billions in federal cuts to Medicaid and other social programs from last year’s Big Beautiful Bill, the ballot’s authors project that it would raise an estimated $100 billion in new revenue for Medi-Cal and other social programs over the next five years.

Earlier this month, a second major wealth tax proposal was introduced by Sen. Bernie Sanders and Rep. Ro Khanna, both of whom have been vocal supporters of the California initiative. The more aggressive Sanders-Khanna proposal calls for a 5 percent annual wealth tax on the country’s approximately 950 billionaires, which they project would raise up to $4.4 trillion over the next decade. In their bill, that revenue would go toward funding half a dozen policy measures, including a $3,000 direct payment to every American in households earning under $150,000 and the complete reversal of Republican cuts to Medicaid and the Affordable Care Act.

So far, the public response to a billionaire tax has been largely positive. Early polling indicates that most Californians support the wealth tax, which currently has the best shot at becoming a reality. Last month, a survey from the Republican-leaning pollster Nestpoint found that 60 percent currently back the proposal, while just 24 percent oppose it. Even when respondents were given opposition messaging, 54 percent continued to favor the proposition.

Not surprisingly, most of California’s billionaires have reacted to the ballot initiative with alarm bordering on panic, denouncing it as “asset seizure” and threatening to leave the state. Billionaire-backed business groups have already launched their campaign to defeat the proposal, with tech oligarchs like Peter Thiel and Google cofounder Sergey Brin chipping in millions to fund the effort. If past campaigns are any indication, the opposition is likely to spend tens if not hundreds of millions of dollars more to defeat the proposal if it gains the necessary signatures to appear on the ballot in November.

Despite the ballot initiative’s popular appeal, many of the state’s top elected officials have also come out against it, including Governor Gavin Newsom and the Democrats vying to replace him. Newsom has been adamant in his objection to the billionaire tax, and all other efforts to raise taxes on the wealthy, citing the danger it poses to the state’s economic competitiveness. “You can’t isolate yourself from the 49 other [states]. We’re in a competitive environment,” he said in December, warning that “if implemented at a state-only level” it would “drive a race to the bottom.”

Confiscate or Collapse

Newsom and countless other centrist critics of the wealth tax usually articulate a “pragmatic” argument against it. These opponents insist that while a wealth tax might be good in theory, in practice it would simply trigger a mass exodus of ultrawealthy residents to low-taxed states (for the rich, at least) like Florida and Texas (or, in case of a national tax, lower-taxed countries).

This argument makes intuitive sense and is frequently repeated uncritically in the press, but the evidence for it is actually quite weak. Gamage, who helped design the California proposal, told Jacobin that there is a “robust academic literature” on previous tax increases at both the state and international levels that suggests only poorly designed taxes that allow for “paper tax avoidance” show high levels of mobility. Physical relocations, on the other hand, are much less common.

“[T]he consistent pattern is that wealthy people say they will leave, the media reports that they will leave or are leaving, but then when the dust clears and we can actually measure what has happened, actual real mobility responses are very small compared to revenues raised,” Gamage said in an email, noting that the current response in California is “consistent with this historical pattern.”

The California billionaire tax was designed to make it very difficult for the state’s billionaires to avoid paying. If it is approved by California voters, then every single billionaire resident of California as of December 31, 2025, would be on the hook for the 5 percent tax to be paid in annual installments over five years (with the option of deferred payment for more illiquid assets). Despite the usual public threats to flee, then, there would be little real incentive for billionaires to actually move from the state, as they would have to pay the one-time tax regardless.

Even if many of the state’s billionaires did ultimately leave, the argument that it would cost the state more in revenue in the long run doesn’t hold much water, as the state’s billionaires already pay minimal taxes due to the realization loophole. As the authors of the ballot proposal point out in a policy brief: billionaires “do not generally earn much ordinary income nor do they generally sell their assets and thus their income is a relatively small portion (about 2.5 percent) of total California income tax receipt.” The loss in revenue would therefore be slight compared to the projected $100 billion from a one-time wealth tax.

The pragmatic argument against a wealth tax is even less persuasive at the national level, as it would be even harder for ultrarich Americans to avoid paying. For one, US tax law is based on citizenship, not just residence, and renouncing citizenship would trigger a costly exit tax.

When pragmatic arguments fail to persuade, opponents usually resort to more nakedly ideological assertions. They use terms like “asset seizure” and “wealth seizure” while invoking the specter of communist dictatorship and the guillotine. They warn that it won’t stop at billionaires and will in fact “hit the working and middle classes,” while accusing proponents of wanting to “steal” the hard-earned wealth of “job creators.” These arguments share the common subtext that taxing accumulated wealth is an unconstitutional violation of property rights that would lead the country down the slippery slope of socialism, communism, or whatever -ism sounds the most frightening. In other words, it is simply un-American.

The main problem with this argument is not that it’s overwrought, which it is, but that it rests on a historical fallacy. There is a rich tradition in the United States of utilizing taxes not just to raise revenue but to deliberately limit concentrated wealth. The original push to tax the rich developed toward the end of the first Gilded Age, when populists and reformers advocated the income tax as a progressive alternative to the tariff. The movement to replace the tariff viewed the income tax as an effective tool to curb inequality and corporate power. As tax law scholar Michael Graetz notes in his recent book The Power to Destroy: How the Antitax Movement Hijacked America, the income tax was viewed by Gilded Age advocates as “necessary for economic justice in an industrializing nation.”

During the New Deal, Franklin Delano Roosevelt openly endorsed this egalitarian use of taxes to curb “great accumulations of wealth” and reduce the country’s towering levels of inequality. In 1936, the top marginal rate was increased to 79 percent and during the war it reached 94 percent. These rates, which Zucman and Saez have aptly described as “quasi-confiscatory,” only applied to those making the equivalent of several millions of dollars in income today and were largely designed to “reduce the inequality of pre-tax income,” which they did. Confiscatory taxes were also aimed at curbing dynastic wealth: throughout the same period, the top rate for the estate tax remained at 77 percent on fortunes worth over $10 million.

This original redistributive impulse behind the income tax largely faded as the twentieth century wore on — helped along by decades of declining inequality that made concentrated wealth seem like a problem solved. Today, however, we have not only returned to but soared past Gilded Age levels of wealth disparity. The first year that Forbes began tracking the wealthiest Americans in 1982, when the tax revolt was in its early stage, shipping magnate Daniel Ludwig appeared at the top of the list with an estimated net worth of around $2 billion, or roughly $6 billion in today’s dollars. At the time, the four hundred richest Americans were collectively worth an estimated $92 billion. More than forty years later, that picture has dramatically changed. Today’s wealthiest man alone is worth almost three times the collective wealth of the original Forbes 400 (adjusted for inflation), and he is rapidly on his way to becoming the world’s first trillionaire. Altogether, the total wealth of the Forbes 400 as of 2025 is $6.6 trillion, or more than twenty times what it was in 1982 (again, adjusted for inflation).

With a new era of trillionaires fast approaching — and with billionaires openly buying our elections and a few AI tech companies engulfing the economy — three words have suddenly become the rallying cry for populists and progressives across much of the nation: tax the rich.

Yet taxing the richest, as most Americans support, will ultimately require taxing their assets, whether through a mark-to-market (unrealized gains) tax or the more populist wealth tax. This won’t be easy, particularly at the national level. According to Gamage, there is “very little prospect for a national wealth tax” in the near future due to opposition from Republicans and still many Democrats, not to mention their billionaire donors. Even if, by some minor miracle, a future populist coalition were to pass the Sanders-Khanna annual wealth tax or a similar proposal, it would likely face an uphill battle in today’s right-wing Supreme Court.

For now, then, the best shot at taxing billionaires appears to be at the state level. There’s perhaps no better place to try than in California, where roughly two hundred billionaires hold some $2 trillion in wealth — more than the state’s bottom half of households combined. Half a century ago, the Golden State launched a tax revolt with Proposition 13, which helped reshape American politics for the worse. The state may now be in the early stages of another revolt — this time pointed squarely at the billionaire class.