The Nobel prize-winning economists Daniel Kahneman and Angus Deaton once proposed that rising income increased people’s emotional wellbeing only up to a ceiling of about $115,000 in today’s money. They probably hadn’t met many billionaires. The ultra-rich may not pursue happiness in the joyful sense of the word.
But they will try every trick in the book to hang on to their stash and woe betide the tax authority that tries to lay a finger on their treasure. And this poses one of the most intractable challenges not only to the solvency of the American state, but to the survival of American democracy. From the technological Olympus of Silicon Valley to the urban canyons of Wall Street, a narrow club of vastly wealthy plutocrats sits on a ballooning share of the nation’s resources.
One per cent of Americans at the apex of the economy are hoarding over 31% of the nation’s total wealth, a cool $55tn in net worth. Getting them to share with the rest of society, to fund redistribution or pay for public goods, is proving pretty much impossible. Their ability to move resources around, hide profit across jurisdictions, and minimize income to hoard wealth until they die appears to put them beyond the reach of taxation.
One recent research paper found that the country’s richest 384 oligarchs paid only 24% of their economic income in 2025, compared with 30% for the average taxpayer. And not all of them are getting top-notch tax advice. Reporting by ProPublica revealed that some of the richest Americans – like Elon Musk, Jeff Bezos, Warren Buffett and Michael Bloomberg – live largely tax free.
California is experimenting with a budgetary Hail Mary pass: In November, Californians will be called to vote on Proposition 40, a one-time 5% tax on the wealth of billionaires residing in the state on 1 January of this year. If the plutocracy’s income is off limits, the thinking goes, best to target its gargantuan assets. California’s gambit is “the first-ever tax on billionaire wealth enacted anywhere in the world” – according to an open letter endorsing the move by six Nobel prize-winning economists on the left side of the political spectrum.
The vote “may well come to be seen as a turning point in the battle between democracy and oligarchy”. Moreover, Prop 40 could raise real money. As of early October, 260 billionaires lived in the state, according to the Forbes billionaires’ list, amassing nearly $2.5tn in wealth.
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