From "Trumponomics": Can the US Actually Tax Billionaires?

**SPEAKER_1** (0:00)
Hi, listeners. The Economics Show with Soumaya Keynes is taking a couple of weeks off its usual programming. So today's episode is from the Bloomberg podcast, Trumponomics. The show explores how US President Donald Trump is shaking up the global economy, and what will happen next. Each week, economist and journalist Stephanie Flanders explores these questions with a team of academics and fellow reporters. Today's episode examines whether taxing America's richest is politically or constitutionally possible.
Search for Trumponomics wherever you listen. I'll be back here soon, but for now, enjoy the show.

**SPEAKER_2** (0:41)
Bloomberg Audio Studios, podcasts, radio, news.

**Stephanie Flanders** (0:55)
I'm Stephanie Flanders, Head of Government and Economics at Bloomberg, and this is Trumponomics, the podcast that looks at everything in the economic world of Donald Trump.
This week, we thought it made sense to talk about how the US tax system is struggling to tax gazillionaires and whether any of the bright ideas being floated for extracting more from the mega rich would actually work. It's not only the so-called class warriors who are worrying about wealth taxes these days. The International Monetary Fund held a war gaming exercise a few months back with around 50 finance and technology experts. David Ramley wrote about it for Businessweek. It included folks from Google DeepMind and the RAND Corporation and the Federal Reserve. And they spent hours debating how AI could upend the global economy in various ways.
The AI doomsday scenario they were most concerned about, it turned out, was not killer robots, but a potentially civilisation ending attack on the income tax base. The US government, like many, relies on income taxes for much of its revenues. So if AI destroys well-paying jobs, the theory goes, it could destroy a lot of those taxes.
Now there's plenty of companies and big investors who would be raking it in in that scenario. The trouble for the tax base is that most of that money would be in the form of capital gains on stocks and other assets, which tend to be very lightly taxed. In fact, in the US, they're often not taxed at all. And a number of Bloomberg stories this week have highlighted new and even more efficient ways that the super-rich are finding to avoid capital gains, even as gasoline prices jump again and the high cost of living stays as the number one issue for most voters. So no wonder that we're hearing more and more proposals from progressive politicians for wealth taxes, both in Europe and the US. In California, a one-time billionaire 5% tax is on the ballot in the midterm elections in November. That's got a lot of attention. There are others. Could any of them get passed? And even before we get to that, would any of them work? Joining me to discuss this, we have in our DC studio Caitlin Reilly, who covers Congress for us with a focus on tax and fiscal policy. And I should say, although she's sitting in a special sound booth in Cavadore Hill, it is actually pretty noisy. Caitlin, thanks very much for joining us anyway. It is.

**Caitlin Reilly** (3:14)
Thank you for having me.

**Stephanie Flanders** (3:16)
And I'm happy to say coming back this week is Jason Furman, Professor of Economic Policy at the Harvard Kennedy School and Harvard's Department of Economics. And he of course was chair of President Obama's Council of Economic Advisors, writes and thinks about pretty much everything this podcast is interested in. Jason, thanks for coming back.

**Jason Furman** (3:35)
Great to be back with you.

**Stephanie Flanders** (3:40)
Caitlin, just give us a quick summary of how live this issue is of taxing the wealthy, where you hang out on Capitol Hill.

**Caitlin Reilly** (3:48)
Well, it's increasingly front of mind for Democrats. Democrats are not currently in power in either the House, the Senate, or of course, the White House. And so right now these ideas are more theoretical, but they featured heavily in the 2020 presidential primary on the Democrat side. And we would expect them to feature heavily again, as we look forward to 2028 There are several competing sort of tax proposals on how to get at taxing the wealthy. Some of those are wealth taxes. Some of those would use other types of tax to get at that wealth that's not collected as wages. But we would expect that Democrats will continue to have this debate kind of between the progressive and more moderate likes of the party about how to tax the wealthy. A large part of that is because when you want to create ambitious new social programs, you have to figure out ways to pay for them. And we're already reaching dizzying levels of debt. So how to pay for a Democratic agenda will be front of mind in the years ahead.