Today, Explained - How to tax the (really) rich

Episode Date: September 9, 2026

Taxing billionaires is on the ballot in California. The measure has split Democrats — and may do more harm than good. This episode was produced by Miles Bryan, edited by Jolie Myers, fact checked by Gabriel Dunatov, engineered by David Tatasciore and Bridger Dunnagan, and hosted by Sean Rameswaram. Supporters cheer at the Billionaire Tax Now rally where Sen. Bernie Sanders spoke on Feb. 18, 2026 in Los Angeles, CA. Jason Armond / Los Angeles Times via Getty Images. Listen to Today, Explained ad-free by becoming a Vox Member: vox.com/members. New Vox members get $20 off their membership right now. Transcript at ⁠⁠vox.com/today-explained-podcast⁠.⁠ Learn more about your ad choices. Visit podcastchoices.com/adchoices

If you're a politician in the United States looking to score points with voters, there's probably no fruit hanging lower than dunking on data centers. But a close second is dunking on billionaires. When I ran for mayor, I said I was going to tax the rich. Well, today, we're taxing the rich. But it's not just democratic socialists. It's also a Georgia senator named John Asa. This is a government of, by and for the ultra rich. It is the wealthiest cabinet ever.

This is the Epstein class. It's a Texas Senate candidate named James Talarico. And this year, nearly every Texan, nearly every American will pay more in federal taxes than they did last year, unless you're a billionaire. And of course, the real referendum on taxing the super rich is going down in the golden state. Join me in voting yes on the billionaire tax. We have to do something. How to tax the really rich on today, explain from Vox. You're a pro at running your life at committing to your workout.

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I am once again asking the... Today Explained. All right, I'm Sean Ramosferm and we're going to start with Jeremy B. White, who writes about California politics for Politico. The B does not. stand for billionaire, but he has been writing about the state's potential wealth tax all the same. Of the ballot initiatives I have covered, this is probably the most contentious one. Silicon Valley, not just the billionaires themselves that this would target, but sort of Silicon Valley writ large, has really kind of lost their minds over this.

You had people really banging the drum and saying this will be the end of the innovation economy in California. This is shoddy legal work that seems to be meant to destroy. tech in California. You are fighting to force founders like me to sell huge chunks of our companies to pay for fraud, waste, and political favors for the organizations pushing this ballot initiative. And you've since seen people like Google co-founder Sergey Brin, pour tens of millions of dollars into stopping this thing. You have questions about the wealth tax, Prop 40.

So here are some facts. A dangerous experiment that could cost California $25 billion in tax revenue. Send good paying jobs. A lot of those folks have the ear. of the governor Gavin Newsom, which gets me to the second reason this has been so contentious. It has really split the Democratic coalition here in California. The opponents are not just billionaires. Governor Gavin Newsom said in June, quote, the fight belongs at the federal level, declining

to support the state tax measure. Even among labor unions, there's a rift. SEIU, United Healthcare Workers West, crafted the measure, but its parent organization is staying neutral. Gavin Newsom, the likely next governor of California and Javier Bacera, some major labor unions, as well as Planned Parenthood, a lot of groups that are really pillars of Blue California. And then on the other side, Senator Bernie Sanders and the congressman Rocana, Rokana, who represents Silicon Valley and is almost certainly gearing up for a presidential run. They've both made this argument that this is kind of table stakes for Democrats hoping to win over voters who are disillusioned

about the economy. Are we going to be a party that is for the working class, or are we going to be a party for the donor class? They recently picked up a couple more major allies in the California Democratic Party, which voted to support this thing, despite a pretty intense lobbying effort on the other side, as well as the California Labor Federation. And again, just getting it the way that this is really kind of fractured usual allies, you had the California Labor Federation coming out in support of this, even as major members like the state construction trades group have opposed this measure. A lot of taxes we think about our taxes we pay every year or every time we shop, but this is a 5% one-time tax. That's right. So this would achieve something that has been

floating around on the progressive left, but has never actually gotten this close to reality, which is taxing all of the assets of billionaire. So it's not an income tax. It takes in the artwork, the yachts, the stocks, their total cumulative wealth. The idea being you target the 200-some billionaires in California, and then most of the money would be channeled back into health care. The idea is to offset the deep cutbacks that the federal government made in Donald Trump's signature tax bill. Where did this ballot initiative come from? There is one healthcare union, SEIU, United Healthcare Workers West, and their leader, a guy by the name of Dave Reagan, is probably the best known practitioner in California of ballot initiative politics. He's a guy who loves going to the ballot, and often he has qualified stuff or started qualifying stuff, and then you can use that as leverage. You can go to the people that your ballot initiative would target, and you could say, look, let's make a deal. I'll pull this off the ballot. There was a lot of suspicion.

that that's what this was going to be, but we're going to the ballot. We're going to voters in November on this one. There is so much money that's being made by the top ultra wealthy people in this society. What we're asking of them is a simple, common sense, modest contribution to make our state work. You mentioned this is splitting the Democratic Party. So trade groups, but also current governor, potentially future governor, what is their opposition? There are a couple things. There's an argument that this is essentially poorly designed. It's a one-time tax. 90% of the proceeds go to health care, so there's certainly frustration that it overwhelmingly benefits members of one union that is championing it. And then there is the sort of economic

argument, one that has been validated by the state's nonpartisan fiscal analyst, which is that, yes, this will produce a one-time windfall if it passes, but it will drive enough people out of state, that ultimately it will mean less money for California in the long run. Another billionaire has confirmed he's leaving California. Google co-founders Larry Page and Sergei Bryn have new homes in Florida. PayPal co-founder Peter Thiel, Kraft Venture co-founder David Sachs, and Oracle CEO Larry Ellison are among others who say they're leaving the state. There's a lot of concerns about the larger political repercussions here

of this incredibly contentious tax measure going on the ballot and bringing a lot of billionaires into state politics in a way that they were not necessarily before this. Okay, tell us about that. Tell us about the billionaires and how maybe seemingly politically indifferent, politically passive billionaires are getting in on California ballot initiative politics. It's not unusual for super rich Silicon Valley folks to be involved in federal politics, right? Maybe they host a fundraiser at their home in Atherton or something like that. What we have seen with this ballot initiative is, on the one hand, a group of billionaires led by Sergey Brin, the co-founder of Google, pouring tens of millions of dollars into an effort to stop this, both by spending money against the wealth tax and by qualifying their own rival ballot initiatives that sound nice. You know, they do things like mandate more transparency in state spending, but they're clearly designed to invalidate the wealth tax. And then on a parallel track, you see a real effort that was somewhat in the works, but was certainly accelerated by this, to get more tech allies into the state legislature in Sacramento.

This wealth tax has really fed this perception among a lot of sort of normy Dems who work in tech that California has gone to. far left, that organized labor has too much power, and so they have to fight back. And so, you know, again, I think when you talk about why Democrats and Democratic allies oppose this, there's the specific stuff about how this thing is structured. And then there's the bigger picture consequences of activating a lot of these super wealthy people who at times are quite explicit that their goal is to counter the power of organized labor. How do the people in California feel? We've talked about the billionaire. We've talked about the politicians.

But what about the vast majority of voters? Do they seem into it? Generally speaking, the polling, the credible polling we have seen so far puts this in the sort of low 50s, right? So a majority, but a majority that I would describe is still a fairly weak or tenuous majority. Keep in mind, those numbers are happening really before the big opposition campaign kicks off and make no mistake. The group up, the main group opposing this funded by people like Sergei Brin has already booked somewhere around $100 million worth of air time. And so there's going to be just a deluge of ads fighting this. Teachers, firefighters, carpenters, and Planned Parenthood affiliates of California all have this in common.

They all oppose the so-called wealth tax. Billionaires and businesses are already leaving, taking good paying jobs with them. If you talk to folks who do ballot initiatives for a living, they'll tell you, ideally you want to start off. in high 50s, even low 60s, if you're going to be facing a concerted counter campaign because that drives those numbers down. And in a lot of ways, I think the proponents of this, they know they're going to be outspent. They know they can't go toe to toe with Sergey Brin. They are counting on the self-evident appeal of this to voters who hear, oh, tax the billionaires.

Yeah, of course I want to do that. And that self-evident appeal is part of a larger nationwide movement. but California is kind of the bellwether a lot of times in situations like these, especially with their ballot initiatives. Does what's going on nationally feel like it's influencing what's going on in California right now? It's hard to see how it doesn't. I mean, look, I think the proponents of this thing, they are really trying to channel two national dynamics.

One is backlash to Donald Trump. This whole thing is being framed as Donald Trump passed a really bad tax bill. We got to do something. to counter it. Fighting Trump is a very popular proposition in California. And the second one is this real frustration with an economy that a lot of voters see as just not working distorted to benefit the ultra rich who are the targets of this tax. And so that is a thing that you have very much seen come up in this campaign. And you've even seen Dave Reagan, the union leader pushing this, say, look, we all know Gavin Newsom is running for president.

Governor Newsom probably can't envision a successful campaign where he doesn't accommodate the needs of the billionaire class. But the problem for the rest of us is what that's more likely to lead to is Donald Trump's protege. Do you think if this thing fails, if the majority of California's decide, you know, what, this is a bridge too far? We don't want it. that it kind of, you know, throws cold water over any kind of movement to tax the rich? I think you would have to think if the one of the most democratic states in the country box at attacks on billionaires that, yeah, that certainly shows that it's harder to get done than

you think. I would just note in California, despite the incredibly Democratic electorate, the lopsided margins Democrats have in the legislature with two-thirds plus majorities, Passing taxes is not easy here. It's not as easy as you might think it is. That said, certainly given this political moment we're in, if even California can't pass a billionaire's tax, it certainly doesn't make it look like it's something that's going to be easier to do in Congress or on a national level.

That's it for Politico, Jeremy. But when today explained is back, we're going to ask two dudes who think a lot about tax policy what they make of California's plan. And just by way of spoiler, one of them thinks it's bad, and the other one thinks it's awful. Support for the show comes from Vanta, with AI adoption growing.

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To get your time back, go to granola.a.a.a.a. slash explained and try it on your next call. To tax the billionaires on today, explain. My name is Joshua Rao. Please call me Josh on the program. I am a professor of finance at the Stanford Graduate School of Business and a senior fellow at the Hoover Institution at Stanford University. We've asked you here to talk about California's wealth tax, which is on the best. ballot this November. What are your thoughts on it? Well, I think when you think about whether you should support the imposition of a new tax, there are two questions you have to ask. The first question is, will the tax actually raise revenue for the governments? And the second question is, will it on net be good for me, for you, for the people of California? And the proposition on the

ballot, Proposition 40, the billionaire tax act, fails on both of these counts. On the question of whether it will actually raise revenue for the state, how could a tax not raise revenue? Well, the answer is that the avoidance or the actions that people will take to avoid paying that tax can be harmful to the economy and also to the revenues the government brings in. In this case, billionaires are leaving California. Billionaires are leaving California in anticipation of the possibility of this tax being passed. And when they leave, that means that the amount of tax that would be collected from the wealth tax will be small. smaller. And also, the state will no longer be collecting the income taxes that they contribute every year into the tax base. As for the economy, when job creators, entrepreneurs, innovators,

when they leave, jobs go with them. Maybe not today, maybe not immediately, but they go with them over time. We just have to look at Tesla and Oracle and other companies whose founders have left California. Those companies still have jobs bases in California, but they've been expanding much more in other states. So the wealth tax proposition in California fails on both of these counts. Do you think a wealth tax of any kind is ever a good idea? There's lots of different ways to do it. This way, it sounds like you think is a terrible idea. But is there another way you've seen done elsewhere or another way that's been proposed in this country that you like? We have kind of a hierarchy of different types of taxes in public economics as to which types of taxes are more or less

damaging to the economy. We call it deadweight loss or that there are more or less, cause more or less inefficiencies. And well, taxes do not have good properties on this regard. And the reason for that is that they, they discourage investment. They lead to fewer jobs because people can choose to invest in companies in other countries. You want to levy the tax nationally. They could choose to invest in other countries. Levy at the state level. They can choose to invest in other states. And then if you do put on a well tax, you're going to be requiring people to withdraw money from the businesses that they've created that they own in order to pay the tax. And that's taking money out of job creating businesses and you're handing it over

the government. You're also reducing the amount of jobs and innovation that are going to be created. So I think wealth taxes score very poorly on the economic standards that we would typically look at for taxation. So you would say they're always a bad idea? I would... Or you just haven't met one you liked? In the hierarchy of taxes you look at, it's generally going to be the case that the negative consequences that they have, the distortions that they create are going to be worse than

the benefits that they will have for society, yes. Christobal Young, professor of sociology at Cornell University, where thinking about taxing the rich is one of your specialties. Are you open to taxing the billionaires? Yeah, certainly. I mean, there's a fundamental gap, hole, loophole, we might say, in the tax system where, look, every paycheck, you know, I'm paying taxes straight out of that, so you serve all your listeners. But if you make your money from holding corporate stock that's appreciating and value dramatically over time, you don't pay any tax on that until you sell it. And so that leads just a situation where people are accumulating vast fortunes, essentially, without paying really any tax on it at all.

So it's a huge inequality in the tax system, and it's especially apparent at the very top. And so I think it's just a question of, what are we going to do about it? So I've been studying policies in place. You know, there's states today that have taxes on millionaire incomes, and we have a really good sense of the impacts of that. They raise a lot of revenue.

They don't have very much effect on migration. Maybe a few people move, but generally not. Uh-huh. Generally not. Uh-huh. My research contribution to this is just tracking where millionaires live before and after these tax increases and found, you know, between no to very little tax migration in response to that.

Huh. So, I mean, one of the biggest arguments against this billionaire tax in California is that you're going to chase all the billionaires away. Sergei Bryn has already left. But you're saying the research doesn't show that effect? That's right. But the important point I want to say is that, you know, none of these previous tax proposals have been suggesting that a small number of people would get tax bills up to $10, $12, $13 billion. So, you know, we've been talking about significantly smaller tax policies, right?

And so I've always been cautious and being clear about what the research has shown today is that, you know, our experience with taxing millionaires at the state level has been very successful. And many states over the years have adopted it after watching their neighbors do it and sort of see, you know, how does this play out? And how it plays out is, you know, you get extra revenue and people aren't really moving away. But this tax proposal is a completely different tax instrument. Firstly, it's a one-time tax, but this is not a one-time problem.

This is an ongoing problem year in and you're out. So why are we talking about a one-time sort of band-aided over this? There's good proposals for an ongoing solution that wouldn't be this, you know, very large. I mean, for the people that are affected, this is, you know, going to be an unprecedented tax, that, you know, I don't want to say, poor them, they can't pay it, but we're talking about enormous amounts of money. It sounds like you and Professor Josh, who we just heard from, agree that this California tax might not be the best approach.

It sounds like you disagree on whether or not these taxes generally cause millionaire, billionaire flight. And it also sounds like you disagree on whether or not. we should generally institute wealth taxes. Now, I believe you have a different proposal on how you would do this, and it has to do with this unrealized capital gains. Can you help people who don't maybe have unrealized capital gains understand what those are? Yeah, for sure. So you hold stock in Google, and over the years, the value of that stock has appreciated enormously such that you're now, one of the richest people in the world. But none of that was ever paid out as a paycheck.

It's, you know, essentially sitting in a capital account and therefore it doesn't trigger a tax bill unless it gets sold. And, you know, typically these things very rarely get any of it gets sold. So effectively, it just goes untaxed, potentially forever. And in the meantime, You know, it's not like these folks are living in a monastery somewhere. Like they're living like they're the richest people in the world, you know. And so there's ways to do this. You borrow against it. Borrowing doesn't trigger a tax liability.

Borrowing is not income in the tax code. There's existing proposals at the federal level, which has been worked out in great detail. It's called the billionaire's income tax. The billionaire income tax is not an attack on success. It is a fundamental strike for fairness. It's not a tax on all billionaire wealth. It's a tax on year-to-year increments in billionaire fortunes. So, you know, it's effectively treating, look, if you have $200 billion in Google stock

and the next year it's worth $220 billion, you owe taxes on the $20 billion, not the $220 billion. So it's just on the increment year-to-year and not everything that's. it's ever happened in the past. And that switches it from being a wealth tax to being an income tax. A lot of things count as income and increases in billionaire fortunes, you know, should be treated as income and taxed as income. California billionaire wealth tax proposal, I think, is flawed in many ways, but it is raising a very important conversation about how are we going to address, you know, deep holes and loopholes in our tax system. And this is a conversation we need to be having. Continue the conversation with Professor Christobal, if you please. He's got a book called

The Myth of Millionaire Tax Flight, How Place Still Matters for the Rich. If you'd rather continue the conversation with Professor Josh, he recently co-wrote an opinion piece in the New York Times titled, It Failed in France. It would be a disaster in California. Miles Bryan also has opinions he made today's show. Jolie Myers edited Gabriel Dunatav did the arithmetic, David Tadashore, and Bridger Dunigan mixed from Phantom Planet. This is today explained.