Dear Reader,

Two weeks ago, I wrote about California’s proposed billionaire tax…

And how anyone who opposes it immediately gets labeled a “billionaire bootlicker.”

My argument was simple:

You don’t have to feel sorry for billionaires to understand that wealth taxes are economically destructive.

But there’s another reason this tax should concern you.

Because in the long run, this is not really about billionaires.

It’s about you, me – and every productive citizen in the country.

You see:

Billionaires are Just the Foot in the Door

Let me tell you a story about income taxes…

A tax that everybody today just accepts as “normal”.

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For most of American history, it wasn’t.

Before 1913, the federal government mostly funded itself through tariffs and excise taxes – taxes on imports and specific goods – not a permanent tax on every citizen’s income.

There had been temporary income taxes during the Civil War, but those expired in 1872.

Then, in 1895, the Supreme Court struck down another federal income tax in Pollock v. Farmers’ Loan & Trust Co., which forced politicians to pursue a constitutional amendment.

That became the 16th Amendment, ratified on February 3, 1913.

Later that year, President Woodrow Wilson signed the Revenue Act of 1913, creating the modern federal income tax.

The act established a 1% tax on incomes above $3,000 (equivalent to $101,000 today), with a top rate of 7% on incomes above $500,000 (equivalent to nearly $17 million today).

Only 3% of the population at that time would be subject to it.

In other words, this act was sold as something “small” that would “only target the wealthy”.

But as with most things related to the government, that was just their foot in the door.

By 1916 – just three years later – those rates had doubled.

And by 1923, nearly 40% of households were paying the federal income tax.

That percentage dropped in the subsequent years because of the 1920s recession.

But the moment WWII began, the government sharply increased taxation…

So much so that pretty much every single household was paying taxes (often, multiple members of a household were paying taxes, which is why the percentage can exceed 100%).

Now, you could argue that it was a wartime necessity, and that the fate of the free world was at stake.

Fine.

Except that, even after the war ended…

The share of households paying income taxes barely came back down. And it’s stayed that way ever since.

As Milton Friedman says – “nothing is so permanent as a temporary government program”.

So ask yourself this…

Do You Really Think a Wealth Tax Will “Only” Hit the Billionaires?

Sure, that’s how it’ll start.

But it’s not how it’ll end.

Especially since the math they’re using to sell the “billionaire wealth tax” just doesn’t work.

Right now, the TOTAL combined net worth of all U.S. billionaires is approximately $8.2 trillion.

Let’s push it to the extreme and say that the government imposes a near 100% wealth tax on billionaires.

In one fell swoop, it gains an additional $8 trillion in federal revenue – purely from the billionaires.

But while $8 trillion may seem like an almost unfathomable amount to you and me…

It’s only enough to cover slightly over a year of government spending.

Not 10 years. Not even 5 years.

Just over a year.

Because in 2025, the government spent a staggering $7 trillion.

So, yeah the left can go ahead and tax every single dollar of the billionaires’ wealth…

It won’t make a difference.

Our government is simply too addicted to spending.

Plus, that doesn’t even account for the second-order effects.

That $8 trillion is not sitting in checking accounts.

It is ownership in productive, profitable companies.

So to actually collect that money, billionaires would have to sell assets.

And if the largest holders of the most important companies in America are forced to dump shares, stock prices will likely fall – hard.

Which means the pain doesn’t stay with billionaires.

It hits 401(k)s…pension funds…index funds…retirement accounts…college savings plans.

As I said, the billionaire is the legal target. But ordinary Americans become the collateral damage.

Billionaire wealth is not just billionaire wealth. It is part of the capital structure of the entire economy.

Now of course, if a billionaire wealth tax is indeed passed, it will most likely start at just a few percent…

Which would translate to “only” a few hundred billion dollars in additional government revenue…

Barely enough to put a dent in our debt blackhole.

And what do you think comes after that?

Well, let me put it another way:

What Does an Addict Do When You Give Them More of Their Fix?

Do they crave more of it – or less?

It’s the same with governments.

Once they get a taste of wealth taxes…

They’ll just want more.

And since, as I’ve just shown you – that the billionaires’ wealth is not some sort of infinite money pit..

The only way they can get more…

Is to start going down the ladder, until eventually – just like the federal income tax…

We’ll all find ourselves paying wealth taxes.

Until next time,