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

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Basically, market to a bigger than what you have here is a structure or change in the world's history.

Welcome to Prophecy Markets. At the height of the Guild at age, the top 0.001% held wealth equivalent to 4% of the nation's GDP. Today, that number has tripled to 14%. By this measurement, wealth and

“equality is 3 times worse in America than the Guild at 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 policy makers 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 off to 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 a 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 inequality 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 decades 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 well GDP in 1987, which is the first year

of the Forbes ranking of global billionaires, and today the wealth is equivalent to 17% of well GDP. So, we are talking about broadly 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 that the global level, we see it in France and 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, California billionaires have wealth equivalent to 50% of California's GDP. We see this observed 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,

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 a hundred percent, 90% on the highest numbers,”

with top estate 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 marginal income tax rates for the highest numbers in the US was 70%, which was at the time the highest

among industrialized countries in the world. In 1986, there is the big Reagan tax reform and

the top marginal tax rate is reduced to 28%, which at the time was the lowest among industrialized countries. In just five years, it is very radical and profound transformation, doesn't there's many reason to believe that this has been one, not the only book, one of the made and drawings behind the rise of income and wealth concentration globally, and the particularly fast rise of inequality in the US. As 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 know where it's led 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 loop holes, there are these interesting little things in the tax code, and 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 absolutely right that the rate, so 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 division? The traditional distinction is that avoidance is legal, and evasion is either illegal, fraud, power is in the greysome, and often it's in that greysome between what's legal and what's obviously illegal. Meaning it it it it it it it it occurs with or to some extent with the letter

of the law, but not with the spirit of the law. Yes. Anyway, what's really important to understand is that these things are not, they're not laws of nature, and they change a lot over time. So policy makers can choose to fight tax avoidance and division 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 like making it normal and good to pay your fair share. Or you can also have policy makers and courage in tax avoidance by saying that yeah, you know, you can avoid taxes that's great. And you should pay the least the smartest 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

tax havens, meaning countries often already with small countries that offer incentive, offers special tax deals to multinational firms or to wealthy families, reduced rates,

“less tax to pay. But what's important to our sense 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 join because this form of international competition

is inherently negative. 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 national 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 there's something 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 on the top one percent paying 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 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 or income and they pay 20% of all taxes, meaning they're effective tax rates for the top one percent as a group is the same as the average tax rates 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 it's the high income professionals pay a decent amount of

“tax. It may view pay more, and I think the US government needs more tax revenue for healthcare,”

education, infrastructure, and so they could pay more. But at that juncture, the big anomaly, the big problem is not with high income professionals, 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 one with wealthiest people, it's around 21,

22%. So there is here something that's just not acceptable. That's a violation of the basic principles of equality before the law. Equally 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, then 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.

this wealth will generate to know of very little taxable income. That's how you have people like Jeff Bezos or Sarah Green or Larry Page in so many 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 realising 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, you know, a tiny amount of income tax. And that's not illegal. It's not

“taxivation. 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 is 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 that offered the same time in the US in 1913. And then the income tax became quite progressive during the course of the 20th century. A main, a major source of government revenue. This is what has allowed countries to build a modern tax system at intern 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 a 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 of that. 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. That's that this is how often the fund get consumption, their lifestyle, they don't realize any income, they don't pay income

to them, they don't have taxable income, but pay their personal consumption expenditure, their yachts, their vacation, okay, they borrow a little bit of money and does a whole industry, the whole part of the financial industry that does just that that provides liquidity to ultra-weather individuals

“to fund their lifestyles. 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-weather is small relative to their income or 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 million, 20 million,

but more than that is complicated. And so by definition, as you move up the wealth distribution, saving rates tend to converge to almost a hundred percent of income and consumption becomes

only to fund their consumption. So if you tax that borrowing, okay, cool, you're going to tax a few million 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 number of American economists chaired by the Columbia University Economist Calshub, and with people like William Vickrey, who went on winning the Nobel Prize in Economics on taxation in Japan, how to build a tax system, a wealth-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 owners. 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 those super rich, I can easily avoid the income tax. And Shub, Vickrey, putting writing this said, "Oh, 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 this said, Japanese do that. And Japan had a wealth tax on the super rich in 1951, 1952.

The abolished it very quickly, because they said, "It's not bringing any money." And of course, you didn't have billionaires on super rich people in Japan right after World War II. But what I want to

“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 after the break. And if you're enjoying the show so fast, 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,

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Again, that's Gusto.com/markets. Hi everybody, it's Megan Repino. I've been thinking a lot about this one question I've been asked over and over. A question about the choices I've made, the colors of my hair, the things in the world I've spoken about, and the things that I haven't. I've heard this

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not to tell us their answer or read from their script, but to take us on their journey. Check out my new show, "Why are you like this?" On YouTube or listen in your favorite podcast app,

“new episodes drop every Thursday. We're back with Prophecy Markets. I think it's bring us to”

the tax proposal that has been capturing all of the headlines incredibly controversial in California that you help 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 up 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 excess 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 2016, would have to pay the 5% one-time wealth tax." Meaning it is impossible for nearly possible for any billionaire

state before January 1st of 2016. Now the California 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 Miami or changing

“some office space or things like that. If you want to be a resident, to be considered as”

residents 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 tax authority or New York, they do the same, looks at to determine the residency status in particular very well-offending videos. And so the best experts in that area

of the tax 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 nearly impossible to avoid the 5% billionaire tax by moving to another state. That was the main reason

“for making it 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 paved 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

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 a hundred million dollars in wealth often times you know can find ways to pay higher civil need or 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 there 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 might be easy to value their wealth because about 2/3 of their wealth corresponds to shares in public elicit companies listed on the stock market. And so as of starting points it makes a lot of sense. It's really 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 pay the way for you know some evolution in the future. I think a lot of people would argue and have argued that this

method of taxation has kind of a slippery slope on the way to infringing private property rights

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 of a cycle that perhaps might not be the right direction. What would you say to those concerns? Well I think if we're talking about property 5% one-time tax and billionaires 250 people

those concerns that we 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. billionaires wealth in California has been multiplied by 30, 30, 60, since 1980s when average income

“per family simply doubled. If you want to, so that's, 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're adding

a next tax then okay I could understand those concerns about okay you're asking people who already contribute a lot to pay even more you know is that 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 paying the California income tax paid by California billionaires, this accounts for about 2% 2% of total California income tax revenue.

This is equivalent to 0% and 2% of their wealth. They pay very little in income tax because they find ways to report not taxable income. So that's the current situation. It's as if they believed in their own parallel society free of tax. Everybody contributes to the poverty infrastructure, the education system, the university, the healthcare 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 a 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 done the mortgage. So right to their true equity, that's for wealth. The property tax rate can be way higher than 1% per year.

So you have millions of people who already have relatively high annual wealth tax rates. When the billionaires are almost tax-free, this is the situation which frankly is an acceptable and the property 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 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 describe 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. 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

tax, which might not be substantial enough, but maybe reforming the estate tax, increasing the capital gains tax, simplifying the tax code, eliminating loopholes, etc. That might get out the

“problem without necessarily demonizing billionaires for being the problem. I think this is”

renot about their merits or demirates as individuals. This is not about whether they're good on bad people. This is

really only about budgetary issues. The state of California needs $100 billion to offset the deep

federal cuts to Medicaid, medical in California, so the health insurance for an at-video 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, $100 billion 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 $100 billion in California in 2026? Number one, you cannot get anything past

through the legislative process, because since 1978, cop 13, you need a super majority of two thirds to pass any tax increase in supplemental, through the normal legislative process. That's why everything has to go through and in effect goes through valid initiatives like the California bigger tax portfolio. 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 income. You could tax their borrowing is going to be tiny. The whole problem is that the consumption is tiny relative to their income, relative to their wealth, they 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 a year after a 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 where there is this

hundred billion revenue need, it and the billionaires pay much less than the rest of the population.

And you cannot make them 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, pop for it. Let me just perhaps mention one thing that I think reclurifies the budget situation and the trade-off in one of the, 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 the people

on their individually compact returns. Okay? 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 and California 250 people. It turns out that today, they are as big, total AGI, total income for 25 million California 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

in addition to whatever the currently pay. This generates as much revenue than the 5% tax on the wealth

of 250 families. Okay? Currently, we are not taxing that wealth. It is barely tax. They pay tax only the equivalent of 0.2% of their wealth. While regular families, well, 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,”

also, 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% to 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 they have not a lot of money at stake. And that then might have been true at the time, but today that they are wealth, as big as large as the total income of the entire 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 its massive and relaxed banks. 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, increasing the capital gains tax rate, changing in heritage tax, closing loop holes, like at 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 mentioned, which is that when you are 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 my realized capital gains, is just irrelevant for them. Do you see a world where, say this is past 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 go to 10%, why not go to 20%. The question being, 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, Prop 40, if it passes, would be the first ever billionaire wealth tax enacted anywhere in the world. Another 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 Prop 40 does the opposite. It's just on the super rich, but with no exemption whatsoever,

for 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 the Silicon Valley or what have you. Then I think, yes, many other states will 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 debt, whether the right rate for a state on its own is 5% or

the type of annual policy is better done at the federal level, but I think there will be this evolution, right? And so I agree, so that's one area where 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 annual. And number three, I think there will be a lot of experimentation, meaning we start with this one-time 5% tax, then perhaps an annual 1% annual 2% 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 organise taxation for the

one-time 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, changing course when we think it's necessary. Do you consider 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 mismatched their budgets, and a result is two 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 leaving their own parallel society, and so they're with, structurally, because they don't have a lot of texts to pay, grows much faster than the wealth of everybody else, and the problem with 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 the problem for democracy, because there is a fundamental tension between extreme wealth on the one hand, an extreme

“constant version of wealth, and the very possibility of democracy. And I think this is what we should”

be concerned about today, the summer of 2026, and this has been understood for centuries that wealth for most people is a good thing, would like to encourage wealth accumulation by the middle class, by the working class, great, but wealth for the super rich is not owning a home or retirement saving for their old days, wealth for them is power, it's the power to influence politics, the power to buy media companies, and so to influence the 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 the power is what is urgent today, and I'm concerned about the under-shooting, under-regulating, and about the risk of continuing the continuation of the oligarchic spiral that we see in that country, that is my concern,

concern that we might go to foreign, 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. If there's anything we've heard about this entire summer, no matter where we go or who we talk to,

“it's about gas prices. I don't drive as much. I think they're just skyrocketing”

day in day out. Gas prices are up since Donald Trump started his war with Iran, but how much does a little pain at the pump actually affect people's vote? Who is telling the truth? And who is going to represent us and do something about it? And if gas is still near $4 a gallon come November, is it game over for Donald Trump and the Republicans?

The most important is you can't deny the reality that Americans feel people see what

they're paying, you know, Trump trying to not recognize what people are struggling with, and then to ignore the severity of it is just not a winning strategy. That's this week on America actually. Catch us every Saturday on YouTube or wherever you get your podcast.

“We're back with property 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 comes on price and keeps rising. And you can make that thought experiment for yourself. Imagine that some person for some reason ended up owning a hundred trillion dollars in wealth, you know, 99% of the world's wealth. That person would have

tremendous power and influence on anything. No one would want to lead 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 comes on price and an extreme wealth is too much. Inferences on the freedom of the rest of the population. And of course it's hard to know

“what is this tipping point. But I think you look at what has happened in the worse. I've got”

the last few years, the enormous power that's been unleashed by this people like Elon Musk when he, you know, he bought Twitter in 2022, turned it into a kind of machine for various ideological causes, including the reelection 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 USID, with consequences, premature death for millions of people

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're 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 centralise 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

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 their

fair 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 of 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're more healthcare. 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 need to have we have to invest in research, 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 who is the country is and the US or it comes to creating public infrastructure.

And so we need government revenue and we're probably 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 education and public spending on healthcare because you know they don't need those public goods

“as nothing to it so that's why we're regulating that power. 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 acclaimed 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 years unlike what the billionaires are doing

why just accumulating it but in a sense they have a claim to private capital. Does it the same way that they have a claim on your houses, your homes with the property tax which is in annual weftags and no it does not make the housing stock publicly owned. So then though it's it's really different you know it's it's just what's the right way to collect money from the super rich. If it's just based on income flows it's not going to work. Now look the

US also has in fact and many people had forgotten about that has a long history with annual wealth taxation at the state level in the 19th century the property taxes that exist 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 in financial assets and deposits and shares and so on. They were not progressive so it was a central rate for everybody but in fact it

used to be the main source of those generalized property taxes used to be the main source of

China or it was not doing the USSR. So I think this is this is really not about this. If you're

concerned I think frankly if you if you approach these issues from like let's say a free market perspective. If you're concerned about function of the market economy if you want to the thriving

“free market economy I think you should be really concerned about the number of actors of individuals”

having the power that they have today because that's really conflicts with the functioning of markets they can buy competitors they can ring markets they can influence policy makers 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 you know a well-functioning market

economy you should be really concerned about this current situation. Is that important to you free markets a functioning free market economy does that is 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”

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 that work well

and I think this is not the case when you have actors or just too big and powerful yeah just going

as we start to wrap up thinking about where this all goes something we often point out is that when you look at the junior coefficient for wealth inequality today it's the same as what it was estimated to have been in 18th century France right before they had a revolution and started chopping up people's heads. I mean is that the end game are we getting close to that point is the hatred of the inequality as 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 had boiled over and turned into physical violence is that something you worry about. I worry about the fact and I think like most people frankly that inequality and extreme inequality is corrosive for the social contract is just harmful for society and it's it's look this is a deeply held view in the US in America if you if you read the founding fathers of this country if you read James Madison for instance

he wrote that excessive wealth concentration is as harmful for a republic as being in a state of war

and he writes that the main objective of critical 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 the”

extreme inequality is just inherently corrosive. But do you think we are close to the situations that we saw in other societies is that frankly it's difficult to know you know I'm not you know it's difficult to make predictions but I don't think it's a very sustainable path and the current pace where the billionaires own 3% of GDP in wealth 40 years ago and now it's 30% and then what you know 70% to 100% you know where do we stop I don't think it's going to continue

is not the only one but frankly one of the most promising way to to to to rationally

and the market particularly address and confirm this issue is for innovative forms of taxation

“including promising wealth taxis 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 and locate fights

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 year 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 on you know the”

CEO of Nvidia said when he was asked about Prop 40 the billionaires can find a beer tax he said

I don't mind this day California has been so good for my from my business has brought so many good things that of course you know taxes are all the price to pay to be based here instead you can 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 or the knowledge they've been able to build on which has been accumulated during centuries might 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. God Real Zuckerman is a professor of economics at the Paris School of Economics some of reset 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 Gabrielle has authored three books including his most recent work we need to tax billionaires Gabrielle 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 Benjman Spencer our video editor is Jorge Cartel research team is Daniela and Kristen O'Donnell and Mia Salvario

Jake McPherson is our social producer Drew Burrow's is our technical director and Catherine Dylan is our executive producer. Thank you for listening to Proftly Markets from Proftly 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. [Music] [BLANK_AUDIO]