We Need to Tax Billionaires

I bought this book after seeing an interview Gary Stevenson did with the author, economist Gabriel Zucman. I recommend both the book and the interview.

Before we get into the whys and hows of an effective wealth tax, let’s take a minute to look at the numbers in play here.

Million: 1,000,000

Billion: 1,000,000,000

• a thousand millions

Trillion: 1,000,000,000,000

• a thousand billions
• a million millions

Say every second from the moment you were born, I gave you a dollar. For reference, there are 86,400 seconds in a day ($60\times 60\times 24$) and 31,557,600 seconds in a year ($60\times 60\times 24\times 365.25$).

After eleven and a half days, you’d be a millionaire.

In almost thirty-two years, you’d be a billionaire.

“Congrats you’re a trillionaire!” would be written in icing on the cake for your thirty-one thousand, six hundred and eighty-ninth birthday.

Million. Billion. Trillion. These words, which look and sound so similar, represent vastly different values. They correspond to vastly different relationships with money.

For you, money is a stock, a bucket of dollars you can carry, and that you try to make sure isn’t empty. For the ultra-wealthy, money is a flow, it’s just a hose of dollars that you can point at anything that isn’t suiting your preferences. Systems: How the Ultra-Wealthy Think About Money, Anil Dash

I’m going to refer to people with wealth over one hundred million dollars as ultra-rich. The scale of their wealth is different. Their deployment of that wealth is different. And I agree with Gabriel Zucman: the taxation of that wealth must also be different.

The Problem

Tax systems are supposed to be progressive. The more a person has benefitted from the society in which they live, the more they give back.

Yet, we live in a world where Jeff Bezos (a multi-billionaire at the time) paid zero federal income tax in 2007. Incredibly, in 2011, when he reported he lost money (despite overall wealth of eighteen billion dollars), he claimed and received a $4000 tax credit for his children. Bezos is one example of many from the ultra-rich class.

“[I]ncome tax — normally the pillar of tax progressivity — vanishes at the top end of the wealth distribution, with billionaires paying just 2 per cent income tax,” Zucman writes. [We Need to Tax Billionaires, p. 18]

If 2 per cent income tax sounds absurdly low, that’s because it is. As of 2026 in the UK, the basic rate of income tax (for folks earning less than £50,270) is 20 per cent. The rate for earnings over £125,140 is supposed to be 45 per cent.

How is 2 per cent possible?

Well, a lot of the ultra-rich don’t pay themselves a traditional wage or have a relatively small wage. Their companies don’t distribute dividends. They stash money in holding companies, where it can still be used to “purchase property, diversify assets, [and] buy up competitors”, but cannot be classified as income. [We Need to Tax Billionaires, p. 35]

Don’t they pay other types of taxes?

Yes, they do. No, those other types don’t make up the difference.

Corporate tax, a sort of fiscal safety valve, is a flat tax at much too low a rate to make up for the vanishing progressive income tax at the top of the economic ladder. Corporate tax eats up about 23 per cent of the income of billionaires. This is not negligible, but far from enough to make them pay as much as the rest of the population, especially since all the other taxes mentioned earlier are truly insignificant at this level of wealth. Remember, because billionaires spend only a tiny fraction of their income — hundreds of millions or even billions of euros per year — VAT [value-added tax] barely makes a dent. And because their assets are mainly shares in companies and not real estate, property taxes are also comparatively painless. We Need to Tax Billionaires, p. 18-19

Does it really matter?

Yeah, it really does. The ultra-rich, who aren’t all that rich when it comes to income tax, are still rich when it comes to getting what they want.

In Zucman’s words, “Great wealth — even if it goes up and down with the markets and even if it yields no dividends — provides unfettered access to the corridors of power. That is something we, as a society, cannot afford to ignore.” [We Need to Tax Billionaires, p. 60-61]

This clip of Trevor Noah has always stuck with me, detailing the bizarre situation where Elon Musk’s wealth was not real enough to tax but was real enough to use as collateral to buy Twitter.

Beyond that murky world of money and politics, we have the simple reality that goods and services are not infinite. If one class of people is rapidly accumulating a lot of wealth, all the other classes are losing their share of the resources.

This is an international phenomenon. Look at the increase of the percentage of Gross Domestic Product (GDP) owned by the richest families in these countries:

United Kingdom, 200 richest families

• 1994: 6 per cent
• 2025: nearly 20 per cent

United States, 400 richest families

• 1982: 2 per cent
• 2025: more than 20 per cent

France, 500 richest families

• 1996: 6 per cent
• 2024: 42 per cent

[We Need to Tax Billionaires, p. 28-29]

If the last few decades have taught us anything, it’s that wealth inequality will not rebalance itself. Left unchecked, it accelerates.

Ballooning wealth + limited resources = higher prices

Higher prices + lack of wealth = debt

We’re heading for a world where a few people live in unimaginable luxury and the remaining 99.9998% are left in desperate poverty.

A Fix

I don’t want to say this is “the fix” because nothing’s going to be easy and instant and straightforward here. But Zucman’s proposal feels like a big step in the right direction:

A minimum annual 2 per cent wealth tax on individuals with over one hundred million (100,000,000) in wealth. [We Need to Tax Billionaires, p. 46]

Given that the ultra-rich gain on average about a 6 per cent return on their wealth per year, 2 per cent tax on that return is essentially 33 per cent tax on their income for the year, bringing them more in line with what the rich already pay. [We Need to Tax Billionaires, p. 48]

The proposal comes with several crucial guardrails against the failures of past wealth taxes:

No exemptions

It’s 2 per cent. When you cross the threshold, you pay the minimum. No creative accounting to hide wealth from taxation.

(Zucman has a considerable bone to pick with the creation of a “professional assets” exemption in France’s 1981 wealth tax. [We Need to Tax Billionaires, p. 52-53])

Continued tax after relocation

There is world-wide interest in a wealth tax to address the world-wide issue of growing inequality. However, it’s unlikely there will be global consensus and coordination on the implementation of a wealth tax. Some country will be the first to implement it and the ultra-rich may want to leave. So be it. The country where their wealth was created is still owed tax. There is precedence for this from the United States:

If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. You are subject to tax on worldwide income from all sources and must report all taxable income and pay taxes according to the Internal Revenue Code. U.S. citizens and resident aliens abroad

Zucman floats two ideas for how a post-relocation tax could work:

• The tax ceases five to ten years after relocation
• The tax decreases over time, proportional to time lived in country

No “take the money and run” option. Wherever the ultra-rich decide to go, the wealth tax follows.

Automatic Exchange of Banking Information

Swiss bank accounts just don’t mean what they used to anymore.

In the second half of the 2010s more than 100 countries—including all large offshore financial centers—started to automatically exchange bank information with foreign tax authorities. Taxing Capital in a Globalized World: The Effects of Automatic Information Exchange

Some tax authorities are already using this newly available information to pre-populate individual income tax returns. Why not use it to pre-populate wealth tax returns as well?

No secrets. Just receipts.

Tax Wealth, Not Work

It’s a catchy slogan, but more importantly, it’s a workable idea at a critical moment.

Tell your friends. Tell your family. Tell your representative.

More resources

• Patriotic Millionaires (US)
• Patriotic Millionaires (UK)
• Patriotic Millionaires (Canada)
• A blueprint for a coordinated minimum effective taxation standard for ultra-high-net-worth individuals
• Gary’s Economics: The Squeeze Out