We’ve written about the problem that the super wealthy don’t pay much in taxes, while we run huge government deficits. We’ve also written how the biggest US billionaires could make a serious dent on climate change if they chose to. Don’t get us wrong. We're full on believers in capitalism and respect wealth creators. We just think they should pay their share of taxes. The 1% most wealthy Americans hold 33% of collective US net wealth ($52 Trillion of $160 Trillion)
Now there’s a clever proposal in California to impose a one-time 5% tax solely on the wealth of billionaire Californians. The tax is being proposed through a voter initiative in November 2026 to amend the state’s Constitution, which bypasses the state legislature. While there are parallels, this would be the first pure wealth tax on living Americans in a state that contains the most billionaires, about 200 of them.
Why a new tax on super wealthy Americans? Our federal government runs ~$2 trillion annual deficits growing the national debt now to $38 trillion. Meanwhile, super wealthy Americans pay little in taxes as they amass fortunes through untaxed super-appreciated equity interests in tech companies, real estate and other businesses. They only sell stock to pay living expenses, thereby “realizing” a gain, and then paying capital gains taxes at a low rate. They’ve figured a work around for that too. Financial firms make margin loans with their equity as collateral, which aren’t taxed.
Meanwhile, working Americans pay almost all the taxes. Eighty percent of federal revenues come from taxing paychecks and other personal income. Your average US doctor makes $400k a year and pays over 40% of that in income taxes, social security and Medicare taxes. A school teacher who makes $75,000/year pays out about 25% of that in taxes. We acknowledge that high end lawyers, bankers and hedge fund managers are now making $10 million plus a year but they pay upwards of 50% in tax. They aren’t the super wealthy we’re talking about. You’d have to make $10 million a year for 100 years to get to a $1 Billion.
There are a couple of very vocal billionaire opponents. David Friedberg, Chamath Palihapitiya and David Sacks are the California tech billionaires of the “All In”podcast. It’s super popular and informative on all things tech/AI, etc. They are each very connected, bright and successful. In their first podcast of 2026, they tell us the California wealth tax is a disaster as it will drive capital and talent from California. In fact, when he heard wind of the tax last year, David Sacks (Trump’s Crypto Czar) picked up his wife and kids, and moved them to Austin Texas. Chamath Palihapitiya only said he’s thinking about it. Maybe his wife and kids told him he’d be crazy to uproot their lives over a non-onerous 5% cut to his $$ Billion plus net worth.
These guys have a lot to offer, but when it comes to talking about taxes, they’re out to lunch. First, none of these billionaires even pretend to pay other than nominal taxes. They contend that taxing wealth is unprecedented and can’t be efficiently done, but fail to acknowledge the federal government routinely taxes wealth. It’s called the inheritance tax. And states systematically tax one major form of wealth; it’s called real estate tax. Nor do they offer any rationale why doctors, teachers and every other working American should pay taxes but they shouldn’t have to. They rail against our big deficits — but don’t come for THEIR $$.
They say taxes support fraudulent, wasteful governments so they shouldn’t have to pay them. Tell that to the rest of US taxpayers. Their guy Musk did six months of DOGEing to cut waste to little effect. And the corruption we see is mostly caused by unlimited campaign contributions from super wealthy Americans to politicians (thank you Citizens United). Exhibit A is Elon Musk getting Trump elected in 2024.They call taxes on them “ASSET SEIZURE” but taxes on worker’s wages are apparently just plain old taxes. They see a false distinction between taxes paid on income the year it’s earned versus down the road after the rich guy made a billion on his stock.
They don’t make it but there’s a fair argument that actual taxpayers know they’re getting taxed each year, while the billionaires thought they had this money in the bag. But they’ve known for a while something like this was coming. The wealth disparity in America is off the charts and getting worse.
This proposal has kicked off a firestorm of debate. These guys worry the California tax is a slippery slope with the progressive/communist democrats coming for their $$. Acknowledging their vulnerability, Chamath Palitipaya suggested the capital gains tax rate could go up a point or two or that using margin loans to avoid realizing gains and taxes should be eliminated. WOW! You’d never hear that from him without this wealth tax bearing down. We don’t know what the right taxing formula is but now we’re going to have a national discussion. That’s good.
