The Week: The Right Turns Against the Rich

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**George Hahn** (1:39)
Welcome to The Week from Prof G Media, where we break down what mattered and what it all means. I'm George Hahn and it's Friday, August 21st. Today, the case for a wealth tax. Then, Tucker Carlson, populist economics and a Republican base that's beginning to lose faith in Trump's economy. And finally, how decisions China made decades ago are shaping the race for energy and AI today.
Let's get into it.
Last Friday, Prof G Markets closed out the summer with Gabriel Zuckman, the French economist who helped design California's Prop 40, the one-time 5% tax on billionaire wealth that voters will decide on in November. His argument isn't that billionaires are bad people. It's that the income tax structurally can't reach them.

**Gabriel Zuckman** (2:37)
If you look at the income tax pay, the California income tax paid by California billionaires, this accounts for about 2% of total California income tax revenue.
This is equivalent to 0.2% of their wealth. They pay very little in income tax because they find ways to report no taxable income. So that's the current situation. It's as if they lived in their own parallel society free of tax. Everybody contributes to the public infrastructure, the education system, the universities, the health care system which has allowed them to thrive, which has allowed their businesses to grow, to be successful, but they don't contribute. That's the current situation. Many people in California, millions of homeowners pay a wealth tax. They pay property taxes. The property tax is typically around a bit more than 1% of the value of their homes. But people who have a mortgage, which is the vast majority of homeowners, the property tax relative to the net wealth of those people, if it's down the mortgage, so relative to their true equity, their true wealth, the property tax rate can be way higher than 1% per year.
So you have millions of people who already have relatively high annual wealth tax rates. When the billionaires are almost tax free, this is the situation which frankly is unacceptable and the prop 40 tries to begin addressing.

**George Hahn** (4:36)
Then Ed asked the obvious question, why now? Zuckman's answer was that billionaire wealth has grown too large and too under taxed to ignore.

**Gabriel Zuckman** (4:48)
And so that's why or so that's the fundamental thing that has changed over the last decades. If you compute this ratio, how big is billionaire wealth relative to total income for the population, the ratio was about 10% in the 1980s, 1990s, meaning the government revenue at stake from taxing billionaires were not very high.
And I think many people have remained stuck in the 1980s, 1990s where they think, well, the billionaires are so few in number that perhaps they don't pay a lot of tax, but who really cares? Because there's not a lot of money at stake. And that might have been true at the time. But today that their wealth has become as large as the total income of the entire population, the situation is just completely different. And when there is a revenue shortfall, like today in California, the most logical starting point is with this massive undertaxed base.