“Billionaires should pay a significantly higher tax rate than the middle class.”

This isn't hypothetical for California voters this year — Proposition 40, a one-time billionaire wealth tax to fund health care and education, is on the November 2026 ballot. Supporters say the ultra-rich currently pay a lower effective rate than ordinary workers because so much of their wealth sits in unrealized stock gains that never get taxed like a paycheck does. Opponents say a higher rate on billionaires sounds simple but tends to backfire — driving investment and wealthy residents elsewhere while raising less revenue than promised.

Sen. Elizabeth Warren (billionaires should pay much more): "The ultra-rich and powerful have rigged the rules in their favor so much that the top 0.1% pay a lower effective tax rate than the bottom 99%." Her Ultra-Millionaire Tax Act would add an annual tax on fortunes over $50 million: "It's time for the government to stop listening to the richest of the rich and start working for working people." Cato Institute (higher billionaire-specific rates backfire economically): argues wealth taxes "encourage tax avoidance and capital flight, raise little revenue, and tend to become riddled with loopholes," and that reducing after-tax returns on investment "weaken[s] incentives to build businesses... and take entrepreneurial risks." Allison Schrager, economist and Bloomberg columnist (government shouldn't control more of the pie): "Imposing high taxes on the wealthy won't necessarily reduce their power; it will simply reallocate it to bureaucrats... At least billionaires are subject to the discipline and transparency of the market and their shareholders." Her conclusion: "No, Elon Musk does not always spend his money wisely. But I am not convinced the government would do better." Gov. Gavin Newsom (agrees with the principle, not this method): opposes California's own state-level billionaire tax, calling it "really damaging to the state" — while separately arguing the American economy "has been engineered for the very top" and that a national billionaire tax, not a state one, is the right fix.