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

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At the height of the gilded age, the top 0.0001% held wealth equivalent to 4% of the nation's GDP. Today, that number has tripled to 14%. By this measurement, wealth inequality is 3 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 Zuckman 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 policymakers 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 Zuckman. 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 inequalities statistics. How bad is it, and how do we get here? Thanks a lot, and thanks for having me. One of the most striking evolution of the world economy of the last decade 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 probably 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 billionaires have wealth equivalent to 50% of California's GDP. We see this absurd in extreme wealth, there are different reasons, different factors behind this evolution, one that has been very important has been dramatic changes in taxation since the 1980s, especially in a country of 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% of the highest numbers, with a state 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 marginally tax rates for the highest numbers 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 margin of 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 a lot of reason to believe that this has been one, but the only book one of the maid and giants behind the rise of income and wealth concentration globally and the particularly fast rise of inequality in the US. There's the tax rate, which, as you point out, came down. I assume it was largely a story of trickle-down economics, which sounded good, and now we kind of know where it's led to the US in terms of wealth inequality. So there's bringing the number down, but then there are also these other things, like there's tax loopholes. There are these interesting little things in the tax code, an increasingly complex tax code, and there's also the rise of tax havens, which you talk about. Talk a little bit about what else in our taxation system changed, because it seems like there's more to it than just the rates. True, you're absolutely right, that the rates are important, but there is more than that. There is also the explosion of tax avoidance, and sometimes tax evasion. And what you have to understand is that tax avoidance, tax evasion, these are not laws of nature. They're largely policy choices. And just to clarify, what is the difference between avoidance and evasion? The traditional distinction is that avoidance is legal, and evasion is either illegal, fraud, or is in a grey zone, and often it's in that grey zone between what's legal and what's obviously illegal. Meaning it accords with or to some extent with the latter of the law, but not with the spirit of the law. Anyway, what's really important to understand is that these things are not laws of nature, and they change a lot over time. So policy makers can choose to fight tax avoidance and evasion to create the social norms that are going to be conducive of high tax compliance. And that's what happened again in the US in the middle of the 20th century, when you had people like FDR who said that how important it was for people to pay their taxes, that taxes were the price to pay for a civilized society, making it normal and good to pay your fair share. Or you can also have policy makers encouraging tax avoidance by saying that if you can avoid taxes, that's great. And you should pay the least, the smallest amount possible. Anyway, so you have these changes in social norms that have had very concrete implications with two things. One is the growth, the development of a big tax planning, tax avoidance industry. There's a whole business now that's very large, much larger than it was 40-50 years ago. That just helps corporations and the rich optimize or avoid their taxes. And the second thing is indeed the rise of global tax havens, meaning countries, often relatively small countries, that offer incentives, that offer special tax deals to multinational firms or to wealthy families, reduced rates, less tax to pay. tax to pay. What's important to understand is that this initially was just a handful of countries but then over time pretty much it has generalized meaning all countries are playing this game of trying to attract some profits, some activities, some rich people at the expense of their neighbors. And that's a powerful inequality and drawing because this form of international competition is inherently negative sum. It's not growing the pie, it's not growing the world economy, it's just trying to steal a bit of money from other countries and so from that perspective it's in zero sum but in fact it's way worse than that. It's negative sum because the main beneficiaries of that process are international firms and rich people and so it fuels inequality. There are a lot of people who might listen to this perhaps wealthy people who think here this and think I pay a lot in taxes and the statistic that we often hear about is that the top one percent of Americans pay around 40% of or contribute to around 40% of the tax revenue. What would you say to someone who says you know I pay a lot, you're basically saying pay more. So a couple of things, number one, this statistic, the top one percent being 40% of tax revenue, that's just if you focus on the federal income tax, so just one tax but that's misleading right because you have many other taxes and in particular state taxes, sales taxes tend to be quite aggressive and so if you take a comprehensive picture of taxation if you look at all taxes paid by people at all levels of government, everything included including payroll taxes, everything, what you see is that the top one percent accounts for about 20% of total tax collection in the US, which is roughly their share of income. The top one percent earns 20% of all income and they pay 20% of all taxes meaning they're effective tax rate for the top one percent as a group is the same as the average tax rate for the entire population, they don't pay more, they don't pay less. So that's number one. Number two, I would say that in the US it's true that high income or actually high income professionals pay a decent amount of tax. They could, in my view, pay more and I think the US government needs more tax revenue for healthcare, for education, for infrastructure and so they could pay more but at that juncture, the big anomaly, the big problem is not with high income professionals in the upper middle class let's say it's with the billionaires, the billionaires they pay much less tax than the rest of the population. So the average tax rate for the entire population in the US is around 30% for billionaires, all tax included, it's only 24% for the top billionaires, the top 100 wealthiest people, it's around 21-22%. So there is here something that's just not acceptable, that's a violation of the basic principle of equality before the law. Equality before the law, if you apply this principle to tax law, means that wealthier individuals shouldn't be allowed to pay less tax, let's say for their income, than the rest of the population. But that's precisely the situation, not for the top 1% as a whole, but for the billionaires, it's a very small fraction of the population, but that's where we have a big problem and the problem is essentially that for billionaires, the income tax doesn't work well because when you're extremely rich, it's in fact very easy to structure your wealth, such that this wealth will generate no very little taxable income, that's how you have people like Jeff Bezos or Sergey Brin or Larry Page in some years, they have barely or sometimes no taxable income and so they don't have income tax to pay, their companies don't or until recently didn't distribute any dividends, they can avoid realizing any capital gains, they don't need to sell their shares, they pay themselves, sometimes just one dollar in compensation and so they just pay 10-1 of income tax and that's not illegal, it's not tax evasion, it's perfectly illegal, that's how the system works, if you find ways to have no taxable income to report, you have no income tax to pay, and what the recent studies have found is that the problem goes way beyond just a few anecdotes or a few case studies, but it's a structural problem, a structural limitation of the income tax, the ultra wealthy are not yet part of it, that's the problem that we need to fix today, so to be clear, the income tax has been the invention of the income tax, has been an incredible democratic revolution, one of the most important economic transformation of the 20th century, it happened at the beginning of the 20th century, in different countries, at often the same time, in the US in 1913, and then the income tax became quite progressive during the course of the 20th century, a major source of government revenue, this is what has allowed countries to build their modern tax system, and in turn to invest in what has been the key driver of economic growth, which is education for all health care, public infrastructure and so on, so it's been really important, but this revolution is an unfinished revolution, because the ultra wealthy are not yet part of the system. One of the things that we talk about is this idea of the buy, borrow, die strategy, because when you talk about those billionaires, they're not paying themselves, the value of their equity is just going up, and that's how they're rich, but then there's this question of like, "Okay, well, how do you pay for your life?" And our understanding is that you borrow against your assets, and that is not, because you're basically just borrowing against your billions, you're not realizing a taxable event, could you talk a little bit about this borrowing strategy and the extent to which you think it is a real problem in terms of the lifestyles of billionaires, how they're able to fund their lifestyles without really paying anything in taxes, at least on the income side? Yeah, you're right, this is how often the funds, their consumption, their lifestyle, they don't realize any income, they don't pay income tax, they don't have taxable income, but to pay their personal consumption expenditure, their yards, their vacation, okay, they borrow a little bit of money, and there's a whole industry, the whole part of the financial industry that does just that, that provides liquidity to ultra-wealthy individuals to fund their lifestyle. What's important to understand is that sometimes there is this idea that, "Oh, why don't we just tax this borrowing, and that fix the problem?" But that's not true, because what's important to understand is that this borrowing is just not very big, it's not very big, because the consumption of the ultra-wealthy is small relative to their true income, relative to their wealth, right, when you have an income that's in the billions of dollars per year, you're not going to be able to consume a billion dollars per year, that's impossible, perhaps $10,000,000,000, but more than that is really complicated, and so by definition, as you move up the wealth distribution, saving rates tend to converge to almost 100% of income, consumption becomes very small relative to income, and people they need to borrow, the billionaires need to borrow, only to fund their consumption, so if you tax that borrowing, okay, cool, you're going to tax a few millions per year, but that doesn't get at the heart of the problem, the core of the problem. which is that most of the income of the billionaires, the fraction of their income, which is saved, not consumed, would remain tax-free. If you want, in fact, to ensure that billionaires pay their fair share, you need to have some kind of tax that's based on wealth, just because for them, wealth is the right indicator of the ability to pay taxes. And look, this is something that's been long understood, even in the US, which never had a federal wealth tax, an annual federal wealth tax. There's an estate tax, which is a wealth tax, that's just at the time of death. But this has been well understood for a long time. Let me just mention one example. In 1949, there was a commission by including a knockoff American economist, chaired by the Columbia University Economist Carl Schoop, and with people like William Vickray, who went on winning the Nobel Prize in Economics, on taxation in Japan. So how to build a tax system, a well-functioning tax system, in the new Japanese post-war democracy? So how does the ideal tax system look like when you build it from scratch? And what those American economists say is that at first, number one, you should do like in the US, like the Americans, and so in 1949, it meant a highly progressive income tax with rates of up to 18%, 90% for the highest honors. But they also said, that's not enough. In addition to that, you need a wealth tax on the super-rich, because for the reasons I just explained, super-rich can easily avoid the income tax. And Schoop, Vickray, put in writing, they said, by the way, we should also do that in the US, but it's complicated because of the Supreme Court and what have you. But they said, Japanese do that. And Japan had wealth tax on the super-rich in 1951, 1952. They abolished it very quickly, because they said, it's not bringing any money. And of course, you didn't have billionaires or super-rich people in Japan right after World War II. But what I want to explain, what I want to make sure people understand, is that this logic that in the ideal tax system, you have not only a progressive income tax, not only an estate or inheritance tax for meritocratic reasons, but also an annual tax on extreme wealth. The idea that this is the package, you know, of a wealth functioning tax system in a democratic society. This idea has been, in fact, understood for quite some time. We'll be right back off to the break. And if you're enjoying the show so far, send it to a friend, and please follow us on YouTube, Spotify, or wherever you get your podcasts. Support for the show comes from BCX, the public ticker for private tech. For generations, American companies have moved the world forward through their ingenuity and determination. And for generations, every day Americans could be a part of that journey through perhaps the greatest innovation of all. The US stock market. 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I think this brings us to the tax proposal that has been capturing all of the headlines, incredibly controversial, in California that you helped to design, which is the billionaire tax act, which will be on the ballot in California in November. And the idea is to enact a one-time 5% tax on the wealth of billionaires, which would start to get out part of the problem here, which is that their wealth is probably the best indicator of what we should be actually collecting tax revenue on. There are some criticisms. One of them would be that it's a little bit of a crude way to do it. We're just saying a billion and up. Why not 900 million? Why not 800 million? How do we come up with that number, this arbitrary number? Another would be that it's a one-time tax. Why are we doing it now? What is the timing? Why does the timing make sense? It's not an annual tax, as you said. And then the other is this idea of capital flight. And that is that if you enact something like this, you're going to see a huge exodus of wealthy people simply going into other low-tax states because they won't want to pay the taxes, which will be in a lot of ways self-defeating, because you won't actually collect the tax revenue that you wanted to generate. And that does seem to have happened in previous examples in Europe, where European countries have tried wealth taxes. And a lot of them have been repealed because of this issue, where the rich people just leave. They just go somewhere else. What would be your response to these concerns? Number one that is precisely to avoid any risk of exodus, out migration by very wealthy people, that the California billionaire tax, which would be on the ballot as part 40, is a one-time tax. It's been, that's the main reason, because ideally, I agree with you that it should be annual. But it's easier to do an annual tax at a federal level than a state level, where billionaires can move to another state. And so, the proponents of this proposition that said, "Okay, let's minimize the risk of exodus by making it one-time, and the way it would work is that any billionaire who was a resident of California, as of January 1st of 2026, would have to pay the 5% one-time wealth tax." Meaning, it is impossible for a nearly impossible for any billionaire to avoid the tax by moving. The only way that they could avoid the tax was by moving to another state before January 1st of 2026. Now, the California billionaire tax, this initiative was announced in November of 2025. So, they had just a few weeks at the end of 2025 to cut ties with California and to change state from a tax perspective, to change residency from a tax perspective. And I want to emphasize that doing this is not a matter of just buying a home in my aunt, changing some office space or things like that. No, no, no, no. If you want to be a resident, to be considered as resident in another state, you have to be able to demonstrate that the center of your life is in another state. So you have to change schools for your children. You have to change doctors. You have to change vets. You have to change burial plots. There's a long list of criteria that the California Times Authority or New York, they do the same, looks at to determine the residency status in particular very wealthy individuals. And so the best experts in that area of the Times Law believe that no billionaire was able to successfully move out of California from a tax perspective in just a few weeks at the end of 2025. So long story short, it is impossible, or nearly impossible to avoid the 5% billionaire tax by moving to another state. That was the main reason for making it one one time and designing it like that. Now I think what is likely to happen if it passes is that it would probably encourage other states to create their own taxes on billionaires. So you could see similar ballots happening in some years in Washington state or in Massachusetts and so on. And ultimately this process might pave the way for federal wealth tax where it would be much easier to have an annual tax because there's no race. You cannot avoid the tax by moving to another state. And this is precisely what has happened for the income tax. The income tax first began at the state level. Most famously Wisconsin in 1911 was the first state to create progressive income tax. And then it paid the way for the federal income tax in 1930. So that's for the annual versus permanent thing. And then your first question was about the kind of arbitrariness of the 1 billion threshold. Which I don't disagree with. And so in Prop 40 there is a smoothing mechanism. So then it's not like if you are just below 1 billion, you pay zero. And if you're just above 1 billion, you pay 5%. So there is some smoothing. But I think it's fair to say that there is a need for fixing the tax system. Not just for billionaires, but let's say people who have more than 100 million dollars in wealth oftentimes you can find ways to pay whole TV little in income tax. And so there's going to be a need for broader reform down the road. But it's useful to start with billionaires because they are very few in number. So in California it's just around 250 billionaires according to Forbes magazine. So they're very visible. So it's easy to value their wealth because about 2/3 of their wealth corresponds to shares in public listed companies listed on the stock market. And so as a starting point it makes a lot of sense. It could be easy to have high audit rates, to have high to have a good enforcement of that tax. And then if it's successful it could pave the way for some evolution in the future. I think a lot of people would argue and have argued that this method of taxation is kind of a slippery slope on the way to infringing private property rights in America. And I think the billionaires argument would be you're basically just taking 5% without my consent. Even if I try to go somewhere else I don't really have a choice. And what if this marks the beginning of an era where we decide that the solution to our problems to our potentially irresponsible fiscal spending is to simply take people's money, take people's assets. And some would argue that this is going too far, that it is too aggressive and the beginning of a cycle that perhaps might not be the right direction. What would you say to those concerns? Well I think if we are talking about probably 5% one time tax on billionaires, 250 people those concerns really don't make a lot of sense because the wealth of those billionaires has increased like 250% just over the last two years. And we're talking about the 5% tax. And for them it makes no difference whatsoever. It's just the drop in the ocean. Billionaire wealth in California has been multiplied by 30, 30 since 1980s when average income per family simply doubled. So there is this explosion of top and wealth. Everybody agrees with that. This extreme wealth is barely taxed today. So I think if we were starting from a situation where those billionaires already contribute a lot and we are adding an extra tax, then okay I could understand those concerns about asking people who already contribute a lot to pay even more, you know is that fair, is that a good idea? That's not the current situation. The starting point, the current situation is they pay very little. So just some numbers. If you look at the income tax paid, the California income tax paid by California billionaires, this accounts for about 2% of total California income tax revenue. This is equivalent to 0.2% of their wealth. They pay very little in income tax because they find ways to report no taxable income. So that's the current situation. It's as if they they lived in their own parallel society, free of tax. Everybody contributes to the public infrastructure, the education system, the universities, the health care system, which has allowed them to thrive, which has allowed their businesses to grow, to be successful, but they don't contribute. That's the current situation. Many people in California, millions of homeowners pay wealth tax. They pay property taxes. The property tax is typically around a bit more than 1% of the value of their homes, but people who have a mortgage, which is the vast majority of homeowners, the property tax relative to the net wealth of those people. If it's that the mortgage, so relative to their true equity, that true wealth, the property tax rate can be way higher than 1% per year. So you have millions of people who already have actually high annual wealth tax rates. When the billionaires are almost tax-free, this is this situation, which frankly is unacceptable, and that Prop 4E tries to begin addressing. Is there a sense in which Prop 40 might also be designed to punish billionaires? Because I think that one of the difficult things about the taxation conversation and the inequality conversation is that people are very, very angry at billionaires for many of the reasons that you described. For the unprecedented inequality, the fact that one in 10 Americans are still living in poverty, and at the same time there is such thing as a trillionaire in America. And I wonder if the aggression and the stringency with which this taxation has been proposed, Prop 40, a 5% immediate taxation no matter what, if that is expressing some level of anger at the billionaires. And that's the part that makes me a little uneasy, because I wonder if there are other ways to tax them, like you mentioned the borrowing tax, which might not be substantial enough, but maybe reforming the estate tax, increasing the capital gains tax, simplifying the tax code eliminating, loopholes, et cetera, that might get at the problem without necessarily demonizing billionaires for being the problem. I think this is really not about their merits or then it's as indifference. videos. This is not about whether they're good or bad people. This is really only about budget, budgetary issues. The state of California needs a hundred billion dollars to offset the deep federal cuts to Medicaid, medical in California, so health insurance for its below income Americans, which has been slashed in the federal tax bill of 2025. So millions of people are going to lose health insurance. This is going to have ripple effects on the premiums for private health insurance, which are going to increase. So there's a revenue shortfall, one hundred billion dollars to face to offset those cuts. Question, what's the best way to get and the fairest way and the most efficient and the most effective way to get a hundred billion dollars in California in 2026? Number one, you cannot get anything passed through the legislative process because since 1978, COP 13, you need a supermajority of two thirds to pass any tax increase in Sacramento through the normal legislative process. That's why everything has to go through and in effect goes through valid initiatives like the California Billionaire Tax Prop 40. Number two, what are the different levers, different tools that you could play with? Well, you could increase the income tax. Sure, it's not going to affect the billionaires. That's the whole problem. They don't have taxable income or very little in taxable income. You could tax their borrowing. It's going to be tiny. The whole problem is that the consumption is tiny relative to their income, relative to their wealth, the only borrow to fund their consumption, so it would raise trivial amounts of money. You could change the estate tax, but the estate tax is only when they die. So in 30, 40 years, why should everybody have to pay year after year, or even every quarter, if you're self-employed, you have to make advanced tax payments every quarter. And the government really insists that it's important for you to pay your taxes each and every quarter. But for the billionaires, oh, that's okay. We can wait for several decades until they die before we start making them pay anything. That's not logical. So in the current situation, well, there is this hundred billion revenue need. It and the billionaires pay much less than the rest of the population. And you cannot may then pay with the normal tax tools, in particular, the income tax. The most effective, the most logical situation is with some kind of tax based on wealth, hence prop for it. Let me just perhaps mention one thing that I think really clarifies the budget situation and the trade-off in all of that. If you can, let's compare two potential tax bases. So on one hand, you have AGI, adjusted gross income. That's the total income that's reported by people on their individual income tax returns. So total income that's taxed. And on the other, and the other base that I want you to consider is billionaire wealth, the value of all the assets owned by billionaires in California, 250 people. It turns out that today, they are as big, total AGI, total income for 25 million Californian families is as big as the total wealth of 250 billionaires, which means that you get as much tax revenue with a 5% income tax or an increase in the income tax of 5% wage points for everybody in California. Everybody has to pay 5% of their income in taxes. In addition to whatever they currently pay, this generates as much revenue than the 5% tax on the wealth of 250 families. Currently, we are not taxing that wealth. It is barely tax. The paying tax only the equivalent of 2% of their wealth, while regular families, while they pay income tax, some of them pay proper to taxes, they pay sales taxes, so they pay quite a lot. And so that's why or so, that's the fundamental thing that has changed over the last decade. If you compute this ratio, you know, how big is billionaire wealth relative to total income for the population? The ratio was about 10% in the 1980s, 1990s. Meaning, the government revenue at stake from taxing billionaires were not very high. And I think many people have remained stuck in the 1980s, 1990s, where they think, "Well, the billionaires are so few in number that perhaps they don't pay a lot of tax, but who really cares?" Because there's not a lot of money at stake. And that might have been true at the time, but today that they're wealth has become as large as the total income of your population. The situation is just completely different. And when there is a revenue shortfall, like today in California, the most logical starting point is with this massive under-tax base. I assume you don't think that increasing the capital gains tax dramatically would do it. This is something that we have heard proposed. Maybe we just make the capital gains tax rate equal to the income tax rate. Tax capital as much as you would tax labor is your view that that would not be sufficient because billionaires would not sell. Look, I think all these reforms that you've mentioned increase the capital gains tax rate, changing inheritance tax, closing look holes like the step-up in bases at death. All of that should be done. All of that would go in the right direction. But also none of that addresses the fundamental problem that for the ultra wealthy, they don't contribute their fair share. Precisely for the reason that you just mention, which is that when you're a billionaire, you don't need to realize any capital gains. You just don't need to do it. So whatever the right is on realize capital gains is just irrelevant for them. Do you see a world where, say this is passed in California, 5% one-time wealth tax? Could you see a world in which states around the nation start to implement the same thing as they realize that there is, it's politically possible? And then could you see a world where we start doing more of it, where we've decided, you know, next year, why not just do it again? We all agree that we want the billionaires to pay more in taxes. So why not another 5% and why not get a 10%? Why not go to 20%? The question being at what points is there a line, is there a limit in your view as to when this goes too far? So number one, I think that if it passes in California, then indeed, I think it's likely that we see similar initiatives in other states. It would be probably, if it passes, would be the first ever billionaire wealth tax enacted anywhere in the world. A number of countries, especially in Europe, have had wealth taxes in the past. They were completely different because they started way lower in the wealth distribution period, around one million dollars in wealth. But they exempted the billionaires. So probably does the opposite. It's just on the super rich, but with no exemption whatsoever from that. It has never been done. And so the whole country, and in fact, the whole world is going to watch a California. And so imagine that it passes, the state gets a hundred billion dollars, and you know what, the sun keeps rising in the morning. It's not the exodus that was predicted. It's not the other of sick and valley or what have you. Then I think, yes, many other states would look at that experience and say, let's also do it. Number one, number two, I think that of course, one time taxes have limitations. And I think that eventually there will be a transition towards some kind of annual wealth. Whether to write, write for a state on its own is five percent or two percent or one percent. It's difficult to know, it depends on what the other states are doing. And as I said, this type of annual policy is better done at the federal level. But I think there will be this evolution. And so I agree. So that's one area, one point I really agree with the billionaires. They always say, look, it's not going to be one time, it will become annual. Sure, I think that's the sense of history. This will become. this will become annual. And number three, I think there will be a lot of experimentation, meaning we start with this one time five percent tags, then perhaps an annual one percent, annual two percent, other rates. And some people are very frightened about this, the fact that rates might change. My perspective is that we should embrace experimenting. Because that's how we are going to learn about what's the right tax rate and what's the right way to organize taxation for the ultra wealthy. And there was a lot of experimentation over the course of the 20th century with the income tax. It started very low, it went really high, it went very progressive, then the top module tax rate was reduced a lot in the Reagan. And we've learned I think collectively a great deal from that experimentation. And I think something like that is going to happen in the 21st century for billionaire taxation, for progressive wealth taxation more broadly. And at the end of the day, that's the only way that we can learn collectively and decide collectively about the proper way to do taxation is by experimenting, seeing the consequences of these choices and changing course when we think it's necessary. Do you concede there is a world in which we could go too far? I mean, just based on what we've seen throughout history where there have been times where governments have been in extremely bad fiscal situations because they had overspent, because they had mismanaged their budgets and resorted to asset seizures that looking back through history feels more like an authoritarian regime. Do you believe that that is something to keep in mind or is that a distraction and not worth worrying about? I think frankly, the risk as we speak today in the summer of 2026 is to do too little, not to go too far. The risk is to remain stuck in the current situation where the billionaires living in their own parallel society and so their wealth, structurally because they don't have a lot of tax to pay, grows much faster than the wealth of everybody else. And the problem is that it's not just a problem of tax revenue, it's not just a budget problem. It's an inequality problem because there's kind of a snowball effect where people who are already very rich can add to their wealth at the faster pace than everybody else so it fuels the rise of wealth concentration. But the deep problem, by far the biggest problem, is just a problem for democracy because there is a fundamental tension between extreme wealth on the one hand, an extreme concentration of wealth and the very possibility of democracy. And I think this is what we should be concerned about today in the summer of 2026. And this has been understood for centuries that wealth for most people is a good thing, we'd like to encourage wealth accumulation by the middle class, by the working class, great. But wealth for the super rich is not you know owning a home or retirement saving for their old days, wealth for them is power. It's the power to influence politics, it's the power to buy media companies and so to influence a prevailing ideology, it's the power to tilt markets by competitors. And so extreme wealth is always an extreme power that distorts the market economy, that distorts the critical process. And regulating that power is what is urgent today. And I'm concerned about undershooting, under regulating, and about the risk of the continuation of the oligarchic spiral that we see in that country. That is my concern. And I think that's the concern that most Americans actually have, rather than the very hypothetical concern that we might go to far in some distant future. We'll be right back. And just a quick reminder, this show is taking a summer vacation for the next two weeks. So we will be back on August 31st with a fresh episode. This is advertiser content from Comcast Business. 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With hundreds of models, ready to use agents, speed and security built-in, you don't have to pick a side. You can have them all. How will AI revolutionize your business? AWS AI is how? We're back with Profty Markets. Where do you think things go at the current trajectory? Because you point out that we are in a moment that is uniquely urgent and poses unique levels of risk. What kind of America, what kind of world do you fear we are turning into and do you think will realistically happen if we were to not address the inequality problem? I think what worries me is the world where our freedom, our individual freedom is significantly reduced. That's the price that we might end up paying if wealth concentration keeps rising. And you can make that thought experiment for yourself. Imagine that some person, possible reason, ended up owning 100 trillion dollars in wealth, 99% of the world's wealth. That person would have tremendous power and influence on everything. No one would want to live in such a society where one person has so much wealth and so much power. And we're not there, but what it means is that there is necessarily a point where wealth concentration and extreme wealth is too much, infringes on the freedom of the rest of the population. Of course, it's hard to know what is this tipping point. But I think you look at what has happened in the US about the last few years, the enormous power that's been unleashed by this people, like Elon Musk, when he bought Twitter in 2022, turned it into a kind of machine for various Ideological cover. causes, including the election of Donald Trump. This brought him to Washington, D.C. with a quasi cabinet position, Dodge, with total freedom to slash government spending that he didn't like, leading to the shutdown of USAID, with consequences, premature death for millions of people or around the world. This type of extreme discretionary power that we didn't see before, 10 years ago, the risk and the concern I have is that we are going to see more and more of that if we don't find a way to regulate extreme wealth. - Yeah, it seems like power is the significant motivator here. On the other side, the people who are concerned about your proposals would say that, to the other end, it might accumulate or centralize too much power in another entity which would be the government. And it seems that that might be the tension that is playing out right now. There's the accumulation of power and the ability to influence the trajectories of the lives of millions of people in the hands of a handful of tech billionaires. And then there's also the other side, which people are worried about when they see the examples of Mao or the Soviet Union that that might happen in a political context. Is that the right way to think about things? Do you think that there is a balance between those two polarities? Is that something that is part of your calculus when thinking about taxation? - No, because the proposal with wealth taxation is not for the government to own assets like in the Soviet Union or in Communist China. The proposal is not for government ownership of capital. The proposal is about how to structure our tax system so that everybody contributes to their share. And how do we organize this to ensure that we keep investing in what is going to be, to continue being the true and giant of economic growth and share prosperity, which is good schools for everybody, which is access to health care, high quality to high quality health care for everybody, which is transportation or public infrastructure that makes businesses thrive, that complements private production. How do we make this happen? This has been the fundamental driver of growth, this mass public investment in those public goods in the 20th century. And we need more of that in the 21st century. We're going to have an aging population, which means we need more health care. We are going to have to face the challenges of climate change, meaning we need to make lots of investments. We need broader access to higher education. We have to invest in research, in innovation, and all of these things. The private sector has some role to play, but also the public sector often is more efficient when it comes to providing healthcare, for instance, if you compare, you know, OECD countries and the US, or it comes to creating public infrastructure. And so we need going on revenue, and we're planning more than what the US is currently collecting. And the question is, how do we do that, in a way, that's functional and it's not going to work. If the system is captured by a handful of billionaires who have no interest in public spending, in education, public spending, on health care, because they don't need those public goods. That's not going to work. So that's why regulating their power is so important. - You mentioned this idea that the government wouldn't have ownership of capital, that that's not the point, unlike previous communist or socialist regimes. But wouldn't a wealth tax, if the precedent, is that the government has a claim to tax 5% of assets? Is that not de facto a form of ownership of capital? Is that not kind of the direction that we would be going on? I mean, the government presumably wouldn't just sit on the capital, we'd put it to productive use, unlike what the billionaires are doing, why just accumulating it. But in a sense, they have a claim to private capital. - The same way that they have a claim on your houses, your homes, with the property tax, which is an annual wealth tax. And no, it does not make the housing stock publicly owned. So then, no, it's really different. It's just what's the right way to connect money from the super rich. If it's just based on income flows, it's not going to work. No, look, the US also has, in fact, and many people have forgotten about that, has a long history with annual wealth taxation at the state level. In the 19th century, the property taxes that existed in many states, they were known as generalized property taxes. So they were not just on real estate or land, but in many states, they were also on financial assets, then deposits, on shares and so on. They were not progressive, so it was the same rate for everybody. But in fact, it used to be the main source of generalized property taxes, used to be the main source of state government revenue in the 19th century. And it was not communist China, it was not good USSR. So, I think this is really not about this. If you're concerned, I think, frankly, if you approach these issues from, like let's say a free market perspective, if you're concerned about functioning of the market economy, if you want a thriving free market economy, I think you should be really concerned about a number of actors of individuals having the power that they have today, 'cause that really conflicts with the functioning of markets. They can buy competitors, they can ring markets, they can influence policymakers, they can extract brands, they can, you know, everything, frankly, a lot of what's happening in this country in terms of regulatory changes, in terms of law making is downstream from the absurd in billionaire wealth and influence. And I think that if you are generally attached to a well-functioning market economy, you should be really concerned about this current situation. - Is that important to you, free markets of functioning, free market economy? Does that part of your calculation, of course, addressing equality, inequality, but is that part of it for you personally as well? - I think it's important to have a well-functioning market economy, I don't think that this is, you know, the only objective that we should have as a society, and very, for me, what matters a lot, and even more than that is to have a true democracy where everybody has a voice, no matter their wealth, no matter their income. But yes, I think it's important to have markets that work well, and I think this is not the case when you have an actor as well, just too big and powerful. - Yeah, just going, as we start to wrap up here, just thinking about where this all goes, something we often point out is that when you look at the genie coefficient for wealth and equality today, it's the same as what it was estimated to have been in 18th century France, right, before the matter of revolution and started chopping off people's heads. I mean, is that the end game? Are we getting close to that point? Is the hatred of the inequality, is the anger? Is it bubbling up to a point where we might see something like we saw in France or in Cuba or in Russia, countless societies where inequality reached a point that it boiled over and turned into physical violence? Is that something you worry about? I worry about the fact, and I think most people, frankly, that inequality and extreme inequality is corrosive for the social contract. It's just harmful for society. And it's, look, this is a deeply held view in the US, in America. If you read the founding fathers of this country, if you read James Madison, for instance, he wrote that excessive wealth, wealth concentration is as harmful for a republic as being in a state of war. And he writes that the main objective of particular parties should be to prevent that, to regulate inequality so that we don't end up in such a situation of extreme wealth and an imbalanced power. So I think the balanced republic and balanced economy has to come with equality. And extreme inequality is just inherently corrosive. But do you think we are close to the situations that we saw in other societies? Frankly, it's difficult to know, you know, I'm not, you know, difficult to make predictions, but I don't think it's a very sustainable path and the current pace where, you know, the billionaires own, you know, 34% of GDP in wealth four years ago and now it's 30% and then what, you know, 70%, 200%, you know, where do we stop? I don't think this is going to continue like that. I do think there's going to be some innovation. And I think the most promising way is not the only one, but frankly, one of the most promising way to rationally and democratically address and confirm this issue is through innovative forms of taxation, including progressive wealth taxes and billionaires. So that's why, you know, I think that's the most promising solution. So that's why it's been so much time trying to explain advocate for it. But you know, that's not the only one to be sure. Just as we wrap, if you were in front, if you were in a room with the president, the CEOs and leaders of the most valuable tech companies in the world, the billionaires, if you had their ear for a moment, what would be your message that you would want to convey? For the tech billionaires, I would just relay an echo what Jensen, who are only, you know, the CEO of Nvidia said when he was asked about Prop 40, the billionaire billionaire tax, he said, I don't mind this state, California has been so good for my business has brought so many good things that of course, you know, tax is a lot of the price to pay to be based here in Silicon Valley in California. And so I would just echo that and remind them that they owe a lot of their success and their businesses owe a lot of their success to, of course, the thousands of employees that they have, all the knowledge they've been able to build on, which has been accumulated during centuries by all of humanity, but also the university is the infrastructure, the education that California has provided them and to their workers. And so it's just normal for them to contribute their fair share. Gabriel Zuckman is a professor of economics at the Paris School of Economics, some a research professor at the University of California Berkeley and founding director of the International Tax Observatory. He is also the founding director of the PSE Stone Center on global wealth dynamics. Gabriel has authored three books, including his most recent work we need to tax billionaires. Gabriel, this was fascinating, informative. We really appreciate your time. Thanks so much. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Corti, our research team is Daniela on Christian Adonigu and Mia Silvario. Jake McPherson is our social producer, Drew Boros is our technical director, and Catherine Dillon is our executive producer. Thank you for listening to Profty Markets from Profty Media. If you liked what you heard, give us a follow and we'll be back with a fresh episode on August 31st, two weeks. Do you hear that? That sounds right. That means that summer is officially here. It means that grown adults just sprint into the street for a frozen dessert shaped like a cartoon. But this summer, Mint Mobile has a better tree. Every plan, including unlimited, is $15 a month. And unlike ice cream, it won't drip down your wrist or look nothing like the picture. Does anyone have any cash? Give it a try at MintMobile.com/switch. 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