The Economist Admits Billionaires Pay Too Little Tax

On June 4th, The Economist ran a cover leader urging free-market liberals to "stop apologising" and fight back against Gen-Z socialism — naming wealth taxes, "make the billionaires pay," and housing intervention as the ideas to resist. In the very same issue, its finance section ran a quieter headline: "Some billionaires pay too little tax."

Read together, those two pieces tell on themselves. One magazine, one issue, two messages: taxing the rich fairly is dangerous socialism — and also, the rich don't pay their fair share. Both can't be the whole truth.

Give them credit: the finance piece doesn't pretend the problem away. It identifies the exact mechanism we document in our tax-policy paper — "Buy, Borrow, Die." The ultra-wealthy hold appreciating assets, borrow against them tax-free to fund their lives (loans aren't income), and at death hand them to heirs on a stepped-up basis that erases every dollar of lifetime gain. ProPublica's IRS Files showed Elon Musk, Jeff Bezos, and Larry Ellison each paid near-zero federal income tax in years their fortunes grew by billions — all perfectly legal. (Bezos has publicly disputed using the strategy.)

The Economist's preferred remedy? End the stepped-up-basis loophole and tax those gains. That isn't a rebuttal of our platform — it's two planks of it. The Common Good plan already eliminates stepped-up basis for estates above $7M and makes large collateral loans (over $5M a year) a taxable event. On the diagnosis, and on half the cure, we agree with The Economist.

Having conceded the disease, The Economist refuses the dose that would actually work. It waves off the wealth tax as "confiscatory" and "innovation-killing" — the same warning issued about the income tax in 1913, about Social Security, about the minimum wage. The evidence says otherwise: Norway, Switzerland, and Spain levy annual wealth taxes today, and Switzerland has collected one for over a century while remaining one of the richest, most innovative economies on earth. A 2% levy on a $50-billion fortune is not confiscation. It's what a nurse already experiences every payday — only she pays on the first dollar she earns.

That's the tell. The Economist will close the loophole behind the billionaires, but won't ask them to pay an ongoing share like everyone else. It's a half-measure dressed as prudence.

We finish the job — and protect the people The Economist's framing pretends to worry about:

• Tax wealth like work. A 2% annual tax on net worth above $50M, 3% above $1B, with mark-to-market on public stock — roughly the rate a teacher pays on income.
• Close “Buy, Borrow, Die.” Collateral loans over $5M/year trigger taxable realization; stepped-up basis ends for estates over $7M. (This is The Economist's own fix.)
• Stop the flight before it starts. A 30% exit tax on net worth over $20M at renunciation — exactly what Norway and Denmark do.
• End carried interest. Hedge-fund and private-equity managers stop paying capital-gains rates on what is plainly labor income (~$14B/year recovered).
• Small business is held harmless. Mark-to-market applies only above $100M; gains under $1M/year keep their preferential rate; the $10M business owner is untouched.
• Restore audit equity. Millionaire audit rates fell ~70% since 2010 while low-income filers are audited 5.5× more. We move enforcement to where the money is.

Nothing here touches incomes under $400,000.

The Economist calls it "Gen-Z socialism." We call it the deal everyone else already lives under: you pay tax on what you get. When the wealthiest Americans pay a lower effective rate than the people who teach their kids and build their homes, that isn't a free market — it's a rigged one. The Economist sees the rig. It just lost its nerve about pulling the lever. We haven't.