It's time for a national billionaires’ tax and a new social compact

We must democratize the American economy to save democracy.

Last night, it became certain that a wealth tax would be placed on the November ballot in California. I’m voting no. And I’m going to spend the rest of this piece telling you why, and what we should be doing instead.

When 10% of the people in this country own two-thirds of the wealth, when we have minted the first trillionaire in human history, and yet your wages have stagnated, and your healthcare costs have skyrocketed, something is fundamentally broken. Over the decades, the American economy has been engineered for the very top, a story as old as time: Money buys influence, and influence rewrites the rules. Those rewritten rules funnel even more wealth to the few. Under this weight, democracy itself starts to buckle.

I understand the anxiety driving the wealth tax proposal in California. But I’m voting no because this measure dedicates almost all of the revenue it raises to a single category of state spending. It ignores our public schools, as the California Teachers Association has rightly pointed out, by failing to provide sustainable funding that our communities, parents and children deserve. It turns a blind eye to safety-net clinics and reproductive healthcare providers that Planned Parenthood has fought for decades to protect. There is nothing for housing, nothing for childcare, nothing for public safety workers who must answer 911 calls, and nothing for our public universities that have powered California’s economy for a decade.

This is not how we should set California’s budget priorities. We can’t let a single advocacy organization, however well-intentioned, write the state’s tax code on its own terms. We make those decisions together through the elected Legislature, through a budget, and through the public process that voters built precisely to prevent any single interest from prevailing with disregard for the rest. At the same time, the fight to make the wealthiest Americans pay more in taxes is not one we should be fighting state by state. You may not be able to pick up and move to Texas or Florida to shelter your income from taxation, but I promise you that billionaires can, and do. Wealth is movable, and it shops for the state with the lowest taxes. The fight belongs at the federal level, where this broken system was created in the first place.

We must democratize the American economy to save democracy

So here is what I support: A national billionaires’ tax. A true minimum tax on billionaires — a modern Buffett Rule — that ensures the people at the very top pay at least the tax rate their own workers pay. Today, the office worker can shoulder a higher tax rate than the heiress. The construction worker could pay a higher rate than the developer. And the delivery driver can end up paying a higher rate than the founder of the company whose packages he delivers.

That system is the result of decades of loopholes written by lobbyists and upheld by politicians who knew exactly who they worked for. The wealthy have their own private tax code full of loopholes and exemptions that most people have never heard of, and they’re counting on politicians in Washington to maintain it and keep quiet.

But this system can be undone. We should end the “tax-free lifestyle loan,” the gimmick that lets the ultra-wealthy borrow against their stock portfolios while reporting no taxable income, and then pass the appreciated assets to their children with the gains untaxed. This loophole exists only for the extremely wealthy. We should close it.

We also need to rewrite our inheritance rules. Over the next twenty years, this country will live through the largest intergenerational wealth transfer in human history, with roughly $124 trillion changing hands. If we do not act, that transfer of wealth among the ultra-wealthy will lock in a permanent American aristocracy of inherited wealth, with all the political consequences the founders warned us about.

This country also needs to return to pre-2017 corporate tax rates and close offshore loopholes that allow multinationals to shift profits on paper to drive down their taxes. Trickle-down economics has been a nearly 50-year experiment that has failed. We have the data now: Record corporate profits flowed into stock buybacks and executive compensation. Workers’ real wages stagnated, and vibrant middle-class communities were hollowed out. It is time to stop pretending otherwise.

These common-sense tax proposals address part of the challenge. It’s clear that we are entering an entirely new economic paradigm. Automation could create unfathomable growth, but who benefits from that wealth? We need to ensure every American owns a stake in the future being built by AI through a national public equity fund that takes a major stake in the new economy. Simply, as artificial intelligence reshapes the country, every American should own a piece of the future it builds.

Part of this fund could provide a real transition for the laid-off factory worker in Ohio or the 25-year-old coder in San Francisco who sent out a thousand resumes and got zero callbacks. This could include significant severance and portable benefits while we support them through the transition and into new jobs with programs like enhanced employment insurance.

Which brings me to the bigger fight. There is a working coalition in this country of blue-collar and white-collar, urban and rural, the people who built this country and the people who are trying to find their place in it. They did everything right, and the system still has nothing for them. They are asking for the basics of a decent life, a home in a safe neighborhood, and a doctor they can see without dread. They need child care, an affordable college education, and something left over at the end of the month. What stands in their way is the federal tax code, a corporate code, and an inheritance code written for a different set of Americans. We can rewrite all three together at the federal level with a new social compact. It’s time for an economic reset for America.

If we do act, it becomes a once-in-a-century chance to renew the American Dream by funding universal child care, making higher education and career training free, funding healthcare, and making a down payment on a real industrial policy for the AI century.

I will keep working in California to deliver for the people who live here, for our schools, healthcare, housing, public safety, climate, and economy. I will continue to oppose the November measure because I believe California’s budget belongs to all Californians, not to any one stakeholder, no matter how worthy the cause. And I will keep making the case, here and everywhere I can, that the fight against concentrated wealth is a national fight that we have to win soon.

We are nearing the 250th anniversary of this country’s revolution. The system America’s founders built was designed to prevent the concentration of power in a few hands, but we have allowed that concentration to happen anyway, slowly, in plain sight, over decades. We can reverse it together, as a country. It is time to democratize the American economy to save our democracy. It is time for a national billionaires’ tax. And it’s time for the country to stop accepting that the rules can only ever be written by the people that the rules protect.

In the weeks ahead, I’ll be writing more about the national agenda I just laid out, starting with how we close the lifestyle loan loophole, rewrite the inheritance code, and build a future for everyone in the AI century. If you want to follow along, subscribe.