But this is specifically designed, as Bradley astutely pointed out, to villainize the rich, to villainize successful people. And when they hear that you want to put the eye of every socialist lunatic in New York on Ken Griffin's house, or you want to villainize Larry and Sergey, they leave. They don't want to be in a state where they're not wanted. And also, it's dangerous. We've now tipped over with the United Healthcare CEO Brian Thompson being murdered. They're literally putting targets on people's backs, and the target they're putting on their back is: this person's successful, and you should hate them for being successful.
Welcome to ProfG Markets. I'm Ed. It is May 20th. Let's check in on yesterday's market vitals. The major indices ended the day in the red, with tech stocks declining ahead of Nvidia's earnings due tonight. Brent crude climbed back above $110 per barrel with no progress on Iran. And the yield on 30-year Treasuries hit its highest level since 2007 on long-term energy inflation expectations. Traders are increasingly anticipating a rate hike from the Federal Reserve. And on Kalshi, the odds that we will see a hike this year have climbed to 43%.
Okay, what else is happening?
Billionaire wealth has more than doubled since 2019, and now voters want to tax it. The 2026 Billionaire Tax Act is officially on the November ballot in California. It would impose a one-time 5% tax on the assets of Californians worth $1 billion or more. The union backing the measure says the goal is to prevent hospital closures across California and fund state programs. But the proposed tax has drawn fierce opposition. Critics argue that wealth taxes target the people driving investment and job creation and could push them out of the state. And California is just the start. Senator Bernie Sanders and Congressman Ro Khanna have introduced a federal version that would go even further, with a 5% annual tax on every American billionaire. So, we figured that this was a good time to have a discussion about the wealth tax with two people who have thought very hard about it. Today we are speaking with Jason Calacanis, investor and host of the All-In podcast, and also Bradley Tusk, founder and CEO of Tusk Ventures. Jason and Bradley, thank you so much for joining me here on ProfG Markets. Bradley, I'm going to start with you because you've just written about this. I'd like to just sort of set the stage here. We're talking about taxing billionaires not just in California but also across the rest of the nation at a federal level. How did we get here? And when you look at California, what are the chances that you think this will actually go through?
Yeah, there's, in my view, no question that we have an income inequality problem in the United States. The question is how do you best go about solving it? And to me, you know, there's half a dozen ideas that are a lot better than a billionaire's tax. And I'm saying this as someone who ran the state of Illinois. I was the deputy governor. I oversaw the state's budget and operations. And so every year I had to figure out how we were going to take in money and then how we were going to distribute it. And I know for a fact that every time that someone like Ed sent us a dollar in tax revenue, by the time that money reached the people in need, 30, 40 cents on that dollar was gone. And so, sure, we could make billionaires pay more in taxes, but odds are a lot of that really is just about, you know, further full-time employment for the public sector and public sector unions who are big Democratic donors. And so I do think that people who have more should have to pay more. I don't think that this is the way to do it. But the reason we're here is there is political opportunity in exploiting the anger of people, and you see that from both sides. Trump is a master of that at the right, and people like Sanders are masters on the left. And when you take people's frustrations with their lives and you stoke their anger and you promise them revenge and justice, they will vote for you. And therefore, the more they vote for you and the more they pay you attention, the more they donate money, the more you do it. And so we're in this self-fulfilling cycle now where both sides are incentivized to be as demagogic as possible, and ideas like billionaire taxes or whatever else become very popular. In terms of your second question, Ed, of will this pass? I'm not sure. So the latest polling that I saw did have it about 50% support, 28% opposed, and the other 23% or wherever it was undecided. But if you look at Kalshi market, it's much more like two to one against. So that kind of gives you a mixed thing. On a more basic level, in the 30-something years I spent in politics, the way I would look at this is to say the average person, when they see the ballot question, is going to say: does this affect me? No. Do I think billionaires should pay more? Yes. Do I want to see healthcare cut? No. And so that would argue that people will vote for it. However, there were some pretty fatal flaws, whether just out of sort of greed or stupidity by the proponents. And one of them is that it allows the California legislature to expand this to any group they want as long as it's consistent with the intents and purposes of the referendum, which means that 1.1 billion could fall to 110 million, or 11 million, or 1.1 million. Once you're at 1.1 million, that's every homeowner in California pretty much. And so the opposition will have a lot of money to spend. And I think that if they can craft the right message, they can win this thing. But I think it's probably going to be pretty close.
Jason, you speak with politicians, lawmakers, and you also speak with many Silicon Valley investors and Silicon Valley billionaires on your podcast and through your investing. I mean, what do you make of their reactions? How are they reacting to this? And then what do you think about this California tax?
So, I think first you have to understand it's not a tax in the traditional sense. This is a seizure. So, they're not just saying, 'Hey, you got to pay 5% more.' If it was, I don't think they would have had any reaction to it. They said anybody with equities that are valued over this amount, or if it was, you know, wealth over a certain amount, nobody would have complained. You might have had some hand-wringing, but generally they've been boiling the frog in New York and in California where people pay over 50%. When I lived there, I paid well over 50%.
I think New York's up to 54%. Would know?
54. Yeah. So, people are not complaining too much about that. If they want to opt out of it, they can. They can move to a no-tax state and save 14, 15, 16%. Okay, great. This is: tell me everything in your house, Ed. Tell me every painting. Tell me every car. Oh, you have the first Model S. What's it worth? Okay, go find somebody to appraise my two, you know, classic cars. What are they worth? And then we want 5% of those. So, and then what do you have in private companies? So, it's a seizure of assets. I've already paid taxes on all of my wealth. And so why am I then having to organize everything, hire auditors? It's just impossible to execute on these. In addition, the way it was written, people who have preferred shares or what's called founder shares, like 10-to-1 super voting rights, would get valued at the voting rights, not the actual asset. That's why Larry and Sergey, Zuckerberg immediately left. Travis has left. David Sacks has left. The list of people leaving is huge. Why? It is incredibly disruptive to have to then go make a list of everything you own and pay 5% of it. Nobody is upset about paying more taxes. So, it's the seizure part. So, it's incredibly poorly constructed. The second piece is everybody knows that once you start a tax, you never take it away. It is incredibly hard to get rid of taxes. And if you smoke cigarettes or you stay in hotels, you see the taxes, they never come down. Nobody's eliminating taxes. In some Republican states, they do lower taxes when they have a windfall, or they'll do like a tax moratorium for some period of time if they have a surplus. Things like universal health care, the minimum wage. There are things that we can do, but this is specifically designed, as Bradley astutely pointed out, to villainize the rich, to villainize successful people. Being a modestly successful person, and knowing a lot of people who are extremely successful, they're astute people. And when they hear that you want to put the eye of every socialist lunatic in New York on Ken Griffin's house, or you want to villainize Larry and Sergey, they leave. And it's partially because, well, they know it's going to get worse. They don't want to be in a state where they're not wanted. And also, it's dangerous. We've now tipped over with the United Healthcare CEO Brian Thompson being murdered. This is basically politicians like Ro Khanna and others, Mamdani in New York, Bernie, they're literally putting targets on people's backs, and the target they're putting on their back is: this person's successful, and you should hate them for being successful.
Full disclosure, we were going to have Ro Khanna on to discuss this. Unfortunately, I think I'm going to have to step in and play the devil's advocate here. I was hoping that Ro Khanna could do it, but I'm going to do it for him, and hopefully we'll have Ro on another time and we can discuss this.
I think one response to your points, Jason, would be that there is this question of would it be effective? The idea of can you appraise everyone's assets and do that every year and count up how much your art is worth and your cars and your private companies, and would you do all of that, and does that make sense? Is it possible? There are very, very big questions there. But it does seem that in a lot of ways, it seems like the very richest, the centimillionaires, the billionaires, in a way I think a lot of people would say that that is an excuse in order to not be taxed properly. And the things that people would point to in terms of the reason that you need something like this, the reason that you would need something quite dramatic, is the fact that wealth inequality has gotten, some would say, way out of control. The top 0.1% of households owning 20% of all the household wealth, up from 10% just around 20 to 30 years ago. The fact the top 1% owns more of the household wealth in America than the entire middle class. That wasn't true 30 years ago. There are things that have changed here, and it seems as though this wealth tax might not be the most effective or easiest way to do it. To Bradley's point, this is something. And then when we propose something, then suddenly the billionaires say, 'This isn't possible. This isn't fair. I don't like this. I'm out of here.' Some would say, 'Maybe you just don't want to pay taxes.' What would you say to that argument?
Well, I want to let Bradley get in here, but I'll answer it as quickly as I can. I don't want to monopolize the time, but what I would say is if you think there's a better way to tax, then we should do that as opposed to villainizing folks and doing something completely impractical that's unconstitutional. I actually have some recommendations here. And as a free-market capitalist myself, I've invested in 700 companies. Some of them have gotten very big, and I invest in 100 new companies a year. I do This Week in Startups. I've done 2,500 episodes where I interview startups. I'm a fan of entrepreneurship. It is the greatest force for change in the world. There's very simple things you can do. You can look at something like...
Sorry, just Jason, I just because I would like to get to solutions. I think it's important. I just want to understand where you stand on this. Do you believe that billionaires, that the richest in our society, that there should be more redistribution, that there should be more taxation, that they should be paying more in taxes just generally?
Yeah. The biggest challenge is... so the short answer is yes.
And the reason is capital gains has not anticipated the concept of capital gains, which we want. We want people to be investing. It wasn't really designed for people to have large amounts of wealth and to be able to set up margin loans. Anybody who's got more than 10 or $20 million can just set up a low-interest mortgage, a low-interest margin loan. For people who don't understand what that is, it's essentially like a credit line you might have against your home, like a home equity line, except it's against your stocks. And you can just draw down from it, pay it back, and if your stocks are growing more than 10% a year, 6, 7, 8, 9, 10% a year, and your margin loan is, mine was as low as 2%, which is essentially free money. Now it's maybe more like 5% given the, but which is still kind of free money. You know, that is an actual loophole, and people will just keep drawing down on their margin. Their equities keep going up. Very simple solution to all this is to look at capital gains and income tax and find something in the middle where we move to sort of a flat tax. And then when you take out and you originate a margin loan, you could put a tax on it. So let's say you had $10 million in net worth, you had a $2 million margin loan, just to make this easy. You could pay the capital gains on that $2 million margin loan, or pay half of them. And then if you pay the margin loan back, you would get the credit for the tax in the future. Very simple solution. And then finally, I'll just say I think we should really have a conversation about minimum wage in this country, which I didn't used to think, but my thinking on it has evolved, but I'll let Bradley jump in here. Yeah.
Yeah, Bradley. So, two suggestions there. It sounds like Jason's advocating for maybe equalizing capital gains versus income tax. Also, some sort of borrowing tax. What do you make of Jason's thoughts, and what do you agree with or disagree with?
Yeah, I mean, I think those are both good ideas. But let's take a half a step back if that's okay, which is if you take your devil's advocate position, the question is what are you solving for? Right? So there are two different things. One would be giving people who have less more, and the other would be promoting a concept of fairness. And I would say these two things are at the moment not linked together. So for example, in New York City in 2012, we had 12.7% of America's millionaires. In 2022, after tax increases, a really bad way to handle COVID, excoriation of people who are successful, more regulations, everything else, that fell to 8.7%. And I'm sorry, millionaires, not billionaires. The resulting differential in money for New York City's and state budget was $13 billion a year in less tax revenues. If you take Mamdani and all of his ideas and all of his plans and his deficit, all of it would have been funded if we had just maintained our percentage of millionaires. And this is why jurisdictional tax increases tend to not work particularly well because, as Jason said, people can move. People have been moving already. And then if you are a poor person, right, and you need public housing, you need Medicaid, you need food stamps, you don't care about social justice, you care about the money being there in the budget to provide you with these things. So if California, which I believe it would at the conclusion of if they do enact this tax, or New York right now, has less money to be able to help the poor, then you're not solving for the problem of inequality. You might be solving to make people who are upper middle class and highly progressive feel better emotionally because they feel like now the people who did better than them are being justly punished. I don't care about their emotional state or needs. I care about helping poor people. So the two ideas Jason threw out there, I think, are good ones. I'll throw some more out there. I think that universal basic income, where you give someone a dollar, is a lot more effective than a system of taxation and then appropriation. Now you need taxation and you need government for things that require collective action. A military, a hospital, building a road, things like that. But most social services, to me, would be unnecessary, and you could make government smaller. You could reduce that part of the tax burden and instead direct that money and more into a system of a direct wealth transfer where if people need money for rent or food or clothes for their kids or whatever it is, they would get it. And by the way, let me give you a couple different ideas, of which I'm an independent at this point. So to Jason's point, I left the Democratic Party about 15 years ago. So I have ideas that offend both sides, right? So I think when you're basically... I think Bernie was right about Medicare for all. It is a successful government program, and there's no reason not to let more people have access to it if they want. You should still have private insurance as an option as well. I think we need to take things that would really make life more affordable. That includes tort reform. We have $367 billion a year spent on frivolous lawsuits. That results in all of us having higher insurance premiums. I think you need a lot more affordable housing, and as a result that means taking a lot of the sort of, you know, sacred...
Sound like you're running, Bradley.
Uh, no, I'm not. But I certainly have a platform if I ever did. Like endless environmental review, endless community review, having to use unions to build everything. And...
Makes a very good point though about people moving in geography. This is the truth in today's era. The people who are on the top half who are business owners and who have equities are running away with it. The people on the bottom half of society who don't own equities are stalled because America is the greatest wealth creation machine in the world. Our equities are phenomenal. That's the win of America. So instead of talking about how do we take more money from the rich, we should be really concentrating on how do we get rid of waste, which is about 30% of all these budgets we found out. And then number two, how can we look at the systematic things that people in the lower half, non-equity holders, how do we make them equity holders? That's what these Trump accounts, America USA accounts, they'll handle that. That's going to take a 20... that's a 20-year story. So we close that gap from kids up, and then we have the rich. So what do you do with the people in between? I've been studying minimum wage, and you know, I travel all over the world, and in New Zealand, Australia, the Nordics, it's 15 to 20 bucks, you know, in US dollars, as high as 20 to $25. I think Switzerland or Norway might be the leader right now in the low 20s. In America, it's still federally seven, and in different locations, it's $15 to $18. You know, Portland, Seattle, San Francisco, New York, etc. We really should be looking at that because when they raise the rates in those other countries, there's a lot of hand-wringing that it would have a negative impact on employment and it would have a negative impact on the economy. And what these studies showed in those markets, and they're not perfectly analogous, but they're worth studying and considering, and I'm not finalized in my thoughts on this, but it turned out there was no discernible increase in the cost of goods. It like added 50 cents to a cup of coffee or a dollar to a hamburger. In other words, it was no big deal. You got rid of tipping because people were living, had a livable wage. And then what happened for the companies, because everybody did it in unison, they were forced to do it because of regulations. We had more customers who could afford to go to Starbucks and buy a $5 coffee or could afford to buy the next pair of Nikes. So you actually take the... if you were in the bottom half of society, if you make it under $100,000 a year, you're probably saving zero except for mandatory savings like Social Security. You're saving zero. So you spend it all. So then you just make more consumers, which is good for the rich people, and you get the virtuous cycle going. And it's really like if I say on All-In I'm for reassessing the minimum wage, 'Oh, you're a libtard.' Whatever. I'm a moderate independent. Every time I bring this up, rich people have, you know, a very dogmatic approach to this. Minimum wage has to be free market. It doesn't. It isn't right now. And so what, would it kill society to try raising it $1 a year for five years to go from $7 to $12? I can tell you none of these [bleep] would last a week making $7 an hour or $15 an hour because they'd be taking Uber Black and ordering DoorDash and spending 150 bucks, you know, for their lunch and to commute. So I think that's like where we need to spend our cycles.
We'll be right back. And if you're enjoying the show, be sure to subscribe to the ProfG Markets YouTube channel at the link below.
We're back with ProfG Markets. I think, Jason, your point that when you suggest raising the minimum wage and then you're immediately dubbed as a libtard gets to something important here, which is that a lot of people would say that the same thing could be said for, one, the wealth tax, but we could go a step further and say, you know, for example, Zohran Mamdani's recent pied-à-terre tax proposal, which, you know, a lot of people have been making the point where if you raise taxes then they'll leave, and then Mamdani says, well, why don't we tax people who have already left? This is their second home. They're already gone. Their tax dollars are gone. Why don't we tax this? And then again, the response is, this is a libtard. This guy doesn't know what he's talking about. And I think on the other side, the way that people start to feel is that we're just shooting down as many ways that we can tax rich people as possible. And we're using things like, this is ineffective, you're a libtard, you're a communist, you're a socialist, to the point where are we going to do anything?
But I think a lot of it again gets to the question of are you trying to solve problems or are you just trying to score political points? So, you know, I came out in favor of the pied-à-terre tax in New York and said that I wasn't going to oppose it or run any campaigns against it. But when Mamdani then chose to make Ken Griffin the face of it, which was totally unnecessary because the issue is not up for debate, like everyone supports it. So he didn't need to do anything. Now, Griffin, who was planning a $6 billion renovation of 350 Park Avenue, might instead do that in Florida and Miami, which would mean 15,000 jobs that would have gone to New Yorkers going to people in Florida instead. And so if you care about New Yorkers and their well-being, you wouldn't take away 15,000 jobs. But the reason why Mamdani did it, and I understand politically why he did it, is he ran for office promising social justice, promised to tax the rich, and that was an appealing message that helped get him elected. He thought he'd be able to bully Kathy Hochul into doing an income tax increase. He was totally wrong. Wasn't able to do anything. He got this effectively pretty meager tax increase. And he had to make it feel meaningful to his base so he could get political credit for it because otherwise it would look like he failed. It was performative.
Well, right. And the way to do it was to make it as controversial as possible. So he deliberately picked a fight with Ken Griffin knowing that we'd all then talk about...
What if Ken Griffin is the next person to get shot by the next Mangione? I mean, that is like literally what people are thinking. I can tell you, like everybody working in Silicon Valley, the number of people I see with security teams now, and I'm like, do you really need... like I'll go to dinner with five people and there's 15 security people, and I'm just like, what are you guys doing here? And they're like, 'Oh, I just had a death threat. Oh, somebody just shot the front of my house. Somebody threw a firebomb at my house. Oh, somebody sent a dead, you know, whatever.' This is like really happening. And the answer to your question, Ed, earlier, which is important, is if we're villainizing everybody, that's not helpful.
Just to interrupt, Jason, because agreed, we should not be villainizing people. We should not be posting images and videos of where Ken Griffin's house is. But...
We shouldn't also assume that the anger there is just because media people have decided to villainize rich people. I think we could also assume that the anger there is real because of a dissatisfaction with the system and a dissatisfaction in the inequality that has gotten worse and worse.
