Sunday Times Magazine
Oct 26, 2026 · 1 hr · 15 segments
NYT Magazine
Oct 26, 2026 · 1 hr · 15 segments
NYT Magazine
Tax the ultra-rich.
Why is it so hard to tax the ultra-rich? See how California's billionaires can accumulate so much wealth.
Next month, California residents will vote on Proposition 40, which if enacted, would levy a one-time wealth tax on the state's 250 or so billionaires.
Proponents of the tax expect it to raise around $100 billion, most of which would be used to offset federal cuts to Medicaid.
Opponents warned that the tax would be a disaster for California's economy, stymieing the state's entrepreneurial spirit and leading to an exodus of some of the state's highest earners.
In 2025, the state accounted for 14% of the United States total economic output.
If California were its own country, its GDP would make it the world's fifth largest economy.
Last year, the total wealth of California's billionaires increased by $497 billion.
If they were their own country and that was their GDP, here's how it would compare with the states.
If they were their own country and that was their GDP, they would rank 35th in the world behind Vietnam, and ahead of the Philippines.
How do billionaires accumulate so much wealth? Much, if not most, of their wealth is held in stocks and is taxed differently than income.
Consider Mark Zuckerberg between 2013 and 2019.
His fortune increased by 368%, thanks primarily to the 342 million shares of Meta he owns.
During that period, he is declared income taxed at a rate of 13.7%, similar to that for the average taxpayer, was much smaller than his net worth and resulted in a tax bill of $536 million.
If you recalculate his tax rate based on his wealth growth, his true tax rate was only 1.1%.
Zuckerberg pays comparatively very little in taxes because most of his wealth cannot be taxed under the U.S. tax code.
He and his billionaire peers are able to enjoy their wealth without drawing a significant salary or selling assets, both of which would incur taxes, by taking out loans for years.
His shares can be used as collateral to take out low-interest loans, borrowing as much as 70% of the collateral's total value.
Because if Zuckerberg gifts his metashares to his heirs, his gains will never be taxed, and until his beneficiaries sell, their gains won't be taxed either.
How much would Zuckerberg owe if Proposition 40 is enacted? Single-day movements in the stock market frequently shift Zuckerberg's fortune up or down by tens of billions of dollars.
On September 21, 2026, for example, his net worth increased by $25 billion, about twice what he would have to pay under Proposition 40.
Opponents of Proposition 40 warn that it will erode Silicon Valley's startup dynamism and undermine California's tax base.
Governor Gavin Newsom claims that the proposed distribution of revenue under Proposition 40 would shortchange education, affordable housing, and child care.
He says that he supports a national wealth tax but thinks that California will be harming itself if it enacts one by itself because other states will quickly undercut it.
How much do California's billionaires contribute in income tax revenue? The economists Gabriel Zuckman and Emmanuel Saez, who helped devise Proposition 40, estimated the combined income tax paid by California's billionaires over the past three years.
Tax the ultra-rich.
Why is it so hard to tax the ultra-rich? See how California's billionaires can accumulate so much wealth.
Next month, California residents will vote on Proposition 40, which if enacted, would levy a one-time wealth tax on the state's 250 or so billionaires.
Proponents of the tax expect it to raise around $100 billion, most of which would be used to offset federal cuts to Medicaid.
Opponents warned that the tax would be a disaster for California's economy, stymieing the state's entrepreneurial spirit and leading to an exodus of some of the state's highest earners.
In 2025, the state accounted for 14% of the United States total economic output.
If California were its own country, its GDP would make it the world's fifth largest economy.
Last year, the total wealth of California's billionaires increased by $497 billion.
If they were their own country and that was their GDP, here's how it would compare with the states.
If they were their own country and that was their GDP, they would rank 35th in the world behind Vietnam, and ahead of the Philippines.
How do billionaires accumulate so much wealth? Much, if not most, of their wealth is held in stocks and is taxed differently than income.
Consider Mark Zuckerberg between 2013 and 2019.
His fortune increased by 368%, thanks primarily to the 342 million shares of Meta he owns.
During that period, he is declared income taxed at a rate of 13.7%, similar to that for the average taxpayer, was much smaller than his net worth and resulted in a tax bill of $536 million.
If you recalculate his tax rate based on his wealth growth, his true tax rate was only 1.1%.
Zuckerberg pays comparatively very little in taxes because most of his wealth cannot be taxed under the U.S. tax code.
He and his billionaire peers are able to enjoy their wealth without drawing a significant salary or selling assets, both of which would incur taxes, by taking out loans for years.
His shares can be used as collateral to take out low-interest loans, borrowing as much as 70% of the collateral's total value.
Because if Zuckerberg gifts his metashares to his heirs, his gains will never be taxed, and until his beneficiaries sell, their gains won't be taxed either.
How much would Zuckerberg owe if Proposition 40 is enacted? Single-day movements in the stock market frequently shift Zuckerberg's fortune up or down by tens of billions of dollars.
On September 21, 2026, for example, his net worth increased by $25 billion, about twice what he would have to pay under Proposition 40.
Opponents of Proposition 40 warn that it will erode Silicon Valley's startup dynamism and undermine California's tax base.
Governor Gavin Newsom claims that the proposed distribution of revenue under Proposition 40 would shortchange education, affordable housing, and child care.
He says that he supports a national wealth tax but thinks that California will be harming itself if it enacts one by itself because other states will quickly undercut it.
How much do California's billionaires contribute in income tax revenue? The economists Gabriel Zuckman and Emmanuel Saez, who helped devise Proposition 40, estimated the combined income tax paid by California's billionaires over the past three years.
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