Welcome to The Week from PropG Media, where we break down what mattered and what it all means. I'm George Hahn, and it's Friday, August 21st. Today, the case for a wealth tax. Then, Tucker Carlson, populist economics, and a Republican base that's beginning to lose faith in Trump's economy. And finally, how decisions China made decades ago are shaping the race for energy and AI today. Let's get into it.
Last Friday, PropG Markets closed out the summer with Gabriel Zucman, the French economist who helped design California's Prop 40, the one-time 5% tax on billionaire wealth that voters will decide on in November. His argument isn't that billionaires are bad people. It's that the income tax structurally can't reach them.
If you look at the income tax paid, the California income tax paid by California billionaires, this accounts for about 2% of total California income tax revenue. This is equivalent to 0.2% of their wealth. They pay very little in income tax because they find ways to report no taxable income. So that's the current situation. It's as if they lived in their own parallel society free of tax. Everybody contributes to the public infrastructure, the education system, the universities, the health care system, which has allowed them to thrive, which has allowed their businesses to grow, to be successful, but they don't contribute. That's the current situation. Many people in California, millions of homeowners pay a wealth tax. They pay property taxes. The property tax is typically around or a bit more than 1% of the value of their homes. But people who have a mortgage, which is the vast majority of homeowners, the property tax relative to the net wealth of those people if you deduct the mortgage, so relative to their true equity, their true wealth, the property tax rate can be way higher than 1% per year. You know, so you have millions of people who already have relatively high annual wealth tax rates, when the billionaires are almost tax-free. This is a situation which frankly is unacceptable and that Prop 40 tries to begin to address.
Then Ed asked the obvious question, why now? Zucman's answer was that billionaire wealth has grown too large and too undertaxed to ignore.
And so that's why also that's the fundamental thing that has changed over the last decade. If you compute this ratio, you know, how big is billionaire wealth relative to total income for the population, the ratio was about 10% in the 1980s, 1990s, meaning the government revenue at stake from taxing billionaires were not very high. And I think many people have remained stuck in the 1980s, 1990s where they think, well, the billionaires are so few in number that perhaps they don't pay a lot of tax, but who really cares because there's not a lot of money at stake. And that might have been true at the time, but today their wealth, you know, has become as large as the total income of the entire population. The situation is just completely different. And when there is a revenue shortfall, like today in California, the most logical starting point is with this massive undertaxed base.
Wealth as political power. That's also the bet Paul Begala thinks the next Republican nominee is going to make. On Tuesday's Raging Moderates, Jessica Tarlov interviewed Begala, Clinton strategist, longtime moderate, and someone who co-hosted a show with Tucker Carlson for years. Jessica asked how realistic a Carlson presidential run is. Begala thinks he runs, wins the nomination, and does it on a platform that his own side won't see coming.
Tucker will whip them all. He will kick their asses. And he's putting together what I believe may be the future of the right, which is populist economics wedded to populist culture. You know, they always had this elitist economics wedded to populist culture. And I think Tucker is going to come full Bernie on the economy. He's going to attack concentrations of wealth. He's going to support unions. Maybe I'm wrong, but there's a holistic argument here, a seamless garment of populism where he's going to hate the malefactors of great wealth and the immigrants and, you know, to piece that all together. And I think there's a lot of power in that. I'm terribly worried for my country. I wouldn't support any of that stuff, but I think I'm telling you, he's the most talented guy out there and candidate talent matters.
Begala is describing a Republican party running against wealth. Shane Goldmacher of the New York Times was on Monday's Raging Moderates episode and his numbers suggest why that lane is even open.
If you look at polling, the topline question is do you approve of Donald Trump or not? And those numbers are bad. But I think it's the demographics inside those numbers that are really troubling for the Republican party, which is the one base, the thing that's been his floor for the 10 years that he's been in national politics in between, even when he was out of power, is that white working-class voters, white voters who did not graduate from college, have basically trusted him forever on the core question of taking care of them economically. They trusted him on fixing the economy, managing the economy, and that trust has eroded. And in a number of polls he is upside down. So more Republicans no longer approve of him on the economy than disapprove of him. That's a sea change. In 2018, his first midterm, so when Republicans lost in a blue wave, his approval rating on the economy among white working-class voters was still 2 to 1. It was like 65% to 30%. Now it's 55-50% against him. That is just a deep, deep problem for Trump and for Republicans because that's a problem everywhere. It's a demographic shift against the party in their own base. We know that Donald Trump historically has turned off independent voters in these midterm elections. If he has a discarded base, that's a deeper problem.
We'll be right back after the break.
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Welcome back. From American politics, we turn to the global race for energy. On Thursday's Conversations episode, Scott spoke with Hannah Ritchie, an Oxford researcher and the deputy editor of Our World in Data. She writes about climate, mostly through energy, where it comes from, who's building it, and how fast. Scott asked whether energy prices decide the AI race. Europe with the most expensive energy, the US in the middle, China the cheapest, and he wanted to know whether that gap decides who wins the AI race. Ritchie told him he was measuring the wrong thing.
