Μake us preferred on Google Billionaires across the political spectrum have come out in opposition to Prop. 40. They argue the tax will cause the ultrawealthy and entrepreneurs to flee the state, eroding California’s long-term income-tax base and the state’s competitiveness. Some prefer to focus instead on rooting out wasteful government spending or on improving the lot of the less well-off.
But even some billionaires who are skeptical of wealth taxes support elements of progressive changes to the tax code.
John Arnold , an energy investor and philanthropist, said “turning a couple knobs on the existing code” would help ensure the very wealthy pay a fair share of taxes, helping to rein in the federal deficit and inflation.
Arnold would have the tax rates on long-term capital gains and ordinary income, which is taxed at higher rates, match. “Income should be taxed at the same rate regardless of whether it is earned from labor or unearned through capital gains or interest” or gifts, Arnold, 52, wrote in an email. He would index the original cost of investment to inflation to better capture its true return.
Arnold said higher rates should apply to higher levels of income, regardless of the type of income. He would also count gains as realized when they are transferred as a gift or at death, in addition to when they are sold, eliminating various loopholes that some tax scholars say contribute to growing wealth inequality.
Billionaire entrepreneur Mark Cuban has voiced skepticism over wealth taxes, partly because he says the hit could stunt investment in startups and small businesses. Cuban instead would have employees be given stock at the same pro rata share that a company’s CEO gets his compensation in, saying stock-market participation is a sure way to increase wealth.
Cuban said he has made a point of paying his employees partly in equity since he started his first company in 1983. People fall behind without “appreciable assets,” he wrote in an email.
Where Cuban, 68, sees promise in amending the tax code is in raising the 1% tax on corporate buybacks of stock, reasoning it won’t influence companies’ behavior. He would also increase taxes on “windfall profits” of greater than $1 billion per transaction—for example, when he sold the Dallas Mavericks. (Such a sale is currently subject to a capital-gains tax.) The higher taxes could be deducted before the seller receives the sale proceeds. “It’s less painful and doesn’t change behavior,” Cuban wrote.
Arnold also would take aim at owners of sports franchises. He said he would ax tax benefits for team owners , who currently can write off much of the value of their teams. “If someone’s worth a trillion,” he said, “they need to pay a share of that in taxes and make sure that gets recycled back into government services.”
Other suggestions abound. In a May CNBC interview, Amazon founder Jeff Bezos , 62, advocated for eliminating federal income tax for the bottom half of workers—or those with a maximum adjusted gross income of $53,801, according to the right-leaning Tax Foundation’s analysis of 2023 IRS data. (Many people in the bottom half don’t pay income tax.) While there could be a debate about whether he should pay more in taxes, Bezos said, vilifying the ultrawealthy and upping their taxes wouldn’t be enough to help those in need.
New York investor Bill Ackman on social media last December criticized wealth taxes. But he also said the tax system should be fairer, taking aim at the strategy known as “ buy, borrow, die .”
The wealthy currently can borrow, tax-free, against appreciating assets that don’t throw off cash. If they hold the assets until death, their heirs can avoid taxes on those gains. Ackman proposed taxing such personal loans by the amount they exceed the assets’ original cost basis, when the loans aren’t short-term.
