Is it accurate to call besos and so on self made? These guys weren’t born on home plate or first, they were born on third base, with rich parents who fund their schooling and give huge loans for them to start these projects, that’s only half the problem. The other is they pretend that they didn’t start on third or second. They pretend they were like the rest of us, nothing could be further from the truth.
"...this is not income." ??? This is the only dumb thing I've read or heard from Yglesias. From Merriam-Webster: "A gain or recurrent benefit usually measured in money that derives from capital or labor." Just because it's not realized for tax purposes doesn't mean it's not income. There are legit reasons not to tax some unrealized gains, but not necessarily all. If my stock appreciates $100, I could liquidate that and buy a week's groceries. How is that different from my salary? If I don't, is it not income because I've chosen to hold it as a risky investment? What if I chose to do that with my salary? Is that then not income? Stating this untruth glibly as an established fact is pretty disingenuous.
It is an analytical error to count unrealized capital gains as wealth if you are not ready to call them income. Maybe you want to tax that kind of capital income a bit less than labor. But you still want to tax it. So Elon cannot have a trillion dollars without making much more than that first and paying some of it in tax.
What would you recommend for a reasonable tax policy? Currently people like Musk & Bezos can support their lifestyle without declaring most of their wealth as income. And it gives them tremendous political power. Tax unrealized gains at inheritance? Employees with stock options have to pay at least capital gains when they vest.
As someone whose assets have appreciated much more per year than his already-pretty-high salary, I agree with you this is a huge problem.
I feel like this could be solved with a wealth tax whose proceeds are redistributed equally to all citizens. This tax should be equal to the safe-withdrawal percentage calculated by FIRE groups, or around 3%. Of course, this tax would decrease financial returns, so we should start with a small wealth tax and work our way up, such that simply holding financial assets does not give holders expected financial gains that are well above inflation.
Another possibility is taxing unrealized capital gains. This has the added bonus of not having to be recalibrated based on the safe withdrawal rate, and could also be ramped up slowly to ensure there aren't any deleterious effects. If the proceeds of this tax are redistributed equally, it would also give everyone in the country an incentive to increase economic growth, instead of having large parts of the country trying to eliminate all immigration because it doesn't benefit them personally.
If people think such a tax is unfair or stealing, I don't see why our economic system should reward people so much for simply holding wealth. The gains wealthy people are receiving don't come from their effort or even their investing skill, they come from our economic system as a whole.
Curious omission of the fact that monetary policy has been loose at historically unprecedented levels for this period. Of course, loose monetary policy directly results in asset price inflation. I feel like the general public doesn’t seem to understand this basic economic fact and everyone wants low interest rates and then complains that the rich are somehow magically getting richer.
This is likely the least insightful column I’ve ever read by Matt. I really wonder what his point was? Feel like I’m missing something. Was this part one of a multi part column? Rare I say this but it was a waste of my time.
Which is why Piketty advocates a wealth tax rather than an income tax. The attempt here to cram an incredibly complex issue into a few paragraphs is irksome. Piketty doesn’t rule out new wealth; that new wealth, especially as Musk/Bezos Etc. levels, becomes generational wealth. Rather than read this piece, read Piketty.
“… a rising capital stock is ultimately good for everyone, and you basically want to encourage these trends. … But it does mean you’re looking at a widening wedge between people with significant asset portfolios and those without.”
The median American has indeed benefited from this entrepreneurial investment and wealth. I think a very strong argument can be made that the gap building between Europe/Japan and the US is that they have missed out on the technology growth that our billionaires built.
I agree that the US has both a more progressive tax structure and a better environment for investing in new ideas. If I was to suggest changes, it would be for Europe to follow our example, not the other way around.
If we are lucky, we will soon be able to complain about trillionaires.
Regarding proposed taxes on wealth or unrealized capital gains…
When the modern income tax was first introduced in 1913, it was only for the high earners; only income above about $673,000 (in 2026 dollars) per year was taxed. Today, of course, almost everyone pays income tax and/or payroll tax.
Every year, millions of middle-class Americans experience many trillions in unrealized, untaxed capital gains from their 401(k)s and home values. Politicians would love to get their hands on those gains and a wealth tax on billionaires would be the proverbial camels’ nose under the tent.
Realized gains in 401ks aren’t even taxed, that’s the whole point. 401ks are about as untouchable as social security so that doesn’t seem like a concern.
As for housing, I think most people under 50 would support a 99% tax on capital gains from housing to keep prices low, lol.
The only explanation I can come up with for this center-right-ass take is normalcy bias. The fact that we need to take billions and billions of dollars from these people, starting immediately, is blindingly obvious. Somebody tell the "you can't just tax the rich" crowd that the rich are ten times richer than they used to be. Yes, actually: we can, and MUST, tax them. Aggressively. Punitively, even. (They are buying our political system and I don't think they should be able to get away with that.)
For somebody who is becoming a deficit hawk you are leaving a f---ton of a lot of money on the table for reasons I am not really clear on.
"If you look at the very richest people in America — Elon Musk, Larry Page, Sergey Brin, Jeff Bezos, Larry Ellison, Michael Dell, Mark Zuckerberg, Jensen Huang, Steve Ballmer, and Jim Walton — nine of them are basically self-made, with a Walton heir in 10th place. So we’re not really living in the world that Piketty warned about with an aristocracy of inherited wealth."
What do I care about 10 people and their stories? They have nothing to do with anybody. They are .00000294% of the country. Many more people than that have died in the amount of time it took to write this comment. Are you trying to tell me these people represent some sign of class mobility? Or that they are anything but totems of the political destructiveness of massive fortunes? Jesus Christ, Matt.
It's not a question of class mobility. It's a question of whether "becoming a multibillionaire" functions as an incentive to contribute something Amazon-level beneficial to the world, or if it's something that only aristocrats can do.
If the latter were true, then the case for "every billionaire is a policy failure" would be much stronger than it actually is in the real world.
Fair enough. I think there are plenty of arguments that billionaires are policy failures that are not invalidated by the fact that they don't only come from aristocratic classes. There are issues in the world besides inequality and mobility. Concentrated wealth has effects on other people, it isn't just some lottery that needs to have fair odds.
For one, we need a clearer problem definition, and it seems that at least three concerns are being conflated: raising tax revenue, preventing/lowering inherited wealth, and closing the gap between the growth of assets like stocks and the other forms of wealth/income growth on your chart.
If the problem is revenue, there are straightforward ways to address it. This isn't complicated, the problem is political in that Americans want a lot of government services but also want someone else to pay for them. Hence this is why Republicans never want taxes raised, and Democrats are only willing to raise them on a tiny handful of very wealthy people who, despite their wealth, cannot come close to closing the present deficit, much less fund the grandiose new spending programs we've seen proposed.
On the second, If the problem is a generalized fear of a permanent aristocracy from inherited wealth, then what is the concern specifically? How much inherited wealth is too much?
The closest we've had to an aristocracy in this country in the last century is probably the Kennedys, who were never billionaires.
I'm all for higher estate taxes, but I think we need to be clear and realistic about how much money that will actually generate, and how much it would actually reduce the generalized fear of a monied aristocracy. And this is America, being rich is a great advantage, but it doesn't confer any special nobility.
Finally, if the problem is the divergent growth of the stock market relative to other things on the chart, then it requires carefully considering the factors that resulted in that condition and addressing those. Anything else is a band-aid.
For instance, even if you limit Elon's heirs to 100 million dollars and not 100 bilion, if stocks keep climbing as they have, the heirs will be back to being billionaires soon enough.
I don't know exactly why stocks have done so much better than everything else, but I suspect it's due to the things others here in the comments have suggested. The bigger question is whether this will or can be sustained and whether there will be a correction. It's important to remember that the wealth everyone is worried about is paper wealth, and there is no iron law that says it can never lose value. Yes, the last 15 years have been a great run, but 15 years is not a long time, and it would not be smart to assume that this short pattern can or will continue.
Personally, I'm skeptical that attempts at punitive wealth capture due to the weirdness of the last two decades is wise or necessary, especially in the absence of tying specific policies to specific outcomes while properly accounting for third-order effects.
And when it comes to the markets, many Americans have their futures tied to the stock market in various retirement or investment accounts, either directly or through pension systems (including state-run pension systems). Therefore, care must be taken by those who want to cut down the billionaires a notch to ensure they don't inadvertently destroy the more modest fortunes of the rest of us.
So does this explain the vibecession in a real sense, and to an extent contradict Matt’s theory that “the average American is doing fine financially, actually”? Or are people doing fine yet comparison in a relative sense is the driver of the vibecession?
How about ending the estate tax and having a graduated inheritance tax? It sounds similar but would actually encourage the wealthy to divide the estate into more recipients.
Isn't this precisely what Dubya's "ownership society" was meant to solve? When a majority of middle-class people have either personal savings or pensions in stocks, then the rising stock price really does lift all boats.
Is it accurate to call besos and so on self made? These guys weren’t born on home plate or first, they were born on third base, with rich parents who fund their schooling and give huge loans for them to start these projects, that’s only half the problem. The other is they pretend that they didn’t start on third or second. They pretend they were like the rest of us, nothing could be further from the truth.
"...this is not income." ??? This is the only dumb thing I've read or heard from Yglesias. From Merriam-Webster: "A gain or recurrent benefit usually measured in money that derives from capital or labor." Just because it's not realized for tax purposes doesn't mean it's not income. There are legit reasons not to tax some unrealized gains, but not necessarily all. If my stock appreciates $100, I could liquidate that and buy a week's groceries. How is that different from my salary? If I don't, is it not income because I've chosen to hold it as a risky investment? What if I chose to do that with my salary? Is that then not income? Stating this untruth glibly as an established fact is pretty disingenuous.
You're just making assertions
It is an analytical error to count unrealized capital gains as wealth if you are not ready to call them income. Maybe you want to tax that kind of capital income a bit less than labor. But you still want to tax it. So Elon cannot have a trillion dollars without making much more than that first and paying some of it in tax.
What would you recommend for a reasonable tax policy? Currently people like Musk & Bezos can support their lifestyle without declaring most of their wealth as income. And it gives them tremendous political power. Tax unrealized gains at inheritance? Employees with stock options have to pay at least capital gains when they vest.
As someone whose assets have appreciated much more per year than his already-pretty-high salary, I agree with you this is a huge problem.
I feel like this could be solved with a wealth tax whose proceeds are redistributed equally to all citizens. This tax should be equal to the safe-withdrawal percentage calculated by FIRE groups, or around 3%. Of course, this tax would decrease financial returns, so we should start with a small wealth tax and work our way up, such that simply holding financial assets does not give holders expected financial gains that are well above inflation.
Another possibility is taxing unrealized capital gains. This has the added bonus of not having to be recalibrated based on the safe withdrawal rate, and could also be ramped up slowly to ensure there aren't any deleterious effects. If the proceeds of this tax are redistributed equally, it would also give everyone in the country an incentive to increase economic growth, instead of having large parts of the country trying to eliminate all immigration because it doesn't benefit them personally.
If people think such a tax is unfair or stealing, I don't see why our economic system should reward people so much for simply holding wealth. The gains wealthy people are receiving don't come from their effort or even their investing skill, they come from our economic system as a whole.
Curious omission of the fact that monetary policy has been loose at historically unprecedented levels for this period. Of course, loose monetary policy directly results in asset price inflation. I feel like the general public doesn’t seem to understand this basic economic fact and everyone wants low interest rates and then complains that the rich are somehow magically getting richer.
This is likely the least insightful column I’ve ever read by Matt. I really wonder what his point was? Feel like I’m missing something. Was this part one of a multi part column? Rare I say this but it was a waste of my time.
Which is why Piketty advocates a wealth tax rather than an income tax. The attempt here to cram an incredibly complex issue into a few paragraphs is irksome. Piketty doesn’t rule out new wealth; that new wealth, especially as Musk/Bezos Etc. levels, becomes generational wealth. Rather than read this piece, read Piketty.
“… a rising capital stock is ultimately good for everyone, and you basically want to encourage these trends. … But it does mean you’re looking at a widening wedge between people with significant asset portfolios and those without.”
The median American has indeed benefited from this entrepreneurial investment and wealth. I think a very strong argument can be made that the gap building between Europe/Japan and the US is that they have missed out on the technology growth that our billionaires built.
I agree that the US has both a more progressive tax structure and a better environment for investing in new ideas. If I was to suggest changes, it would be for Europe to follow our example, not the other way around.
If we are lucky, we will soon be able to complain about trillionaires.
Regarding proposed taxes on wealth or unrealized capital gains…
When the modern income tax was first introduced in 1913, it was only for the high earners; only income above about $673,000 (in 2026 dollars) per year was taxed. Today, of course, almost everyone pays income tax and/or payroll tax.
Every year, millions of middle-class Americans experience many trillions in unrealized, untaxed capital gains from their 401(k)s and home values. Politicians would love to get their hands on those gains and a wealth tax on billionaires would be the proverbial camels’ nose under the tent.
Realized gains in 401ks aren’t even taxed, that’s the whole point. 401ks are about as untouchable as social security so that doesn’t seem like a concern.
As for housing, I think most people under 50 would support a 99% tax on capital gains from housing to keep prices low, lol.
The only explanation I can come up with for this center-right-ass take is normalcy bias. The fact that we need to take billions and billions of dollars from these people, starting immediately, is blindingly obvious. Somebody tell the "you can't just tax the rich" crowd that the rich are ten times richer than they used to be. Yes, actually: we can, and MUST, tax them. Aggressively. Punitively, even. (They are buying our political system and I don't think they should be able to get away with that.)
For somebody who is becoming a deficit hawk you are leaving a f---ton of a lot of money on the table for reasons I am not really clear on.
"If you look at the very richest people in America — Elon Musk, Larry Page, Sergey Brin, Jeff Bezos, Larry Ellison, Michael Dell, Mark Zuckerberg, Jensen Huang, Steve Ballmer, and Jim Walton — nine of them are basically self-made, with a Walton heir in 10th place. So we’re not really living in the world that Piketty warned about with an aristocracy of inherited wealth."
What do I care about 10 people and their stories? They have nothing to do with anybody. They are .00000294% of the country. Many more people than that have died in the amount of time it took to write this comment. Are you trying to tell me these people represent some sign of class mobility? Or that they are anything but totems of the political destructiveness of massive fortunes? Jesus Christ, Matt.
Worst thing you've written in years.
It's not a question of class mobility. It's a question of whether "becoming a multibillionaire" functions as an incentive to contribute something Amazon-level beneficial to the world, or if it's something that only aristocrats can do.
If the latter were true, then the case for "every billionaire is a policy failure" would be much stronger than it actually is in the real world.
Fair enough. I think there are plenty of arguments that billionaires are policy failures that are not invalidated by the fact that they don't only come from aristocratic classes. There are issues in the world besides inequality and mobility. Concentrated wealth has effects on other people, it isn't just some lottery that needs to have fair odds.
I think a lot of this is a bit underbaked.
For one, we need a clearer problem definition, and it seems that at least three concerns are being conflated: raising tax revenue, preventing/lowering inherited wealth, and closing the gap between the growth of assets like stocks and the other forms of wealth/income growth on your chart.
If the problem is revenue, there are straightforward ways to address it. This isn't complicated, the problem is political in that Americans want a lot of government services but also want someone else to pay for them. Hence this is why Republicans never want taxes raised, and Democrats are only willing to raise them on a tiny handful of very wealthy people who, despite their wealth, cannot come close to closing the present deficit, much less fund the grandiose new spending programs we've seen proposed.
On the second, If the problem is a generalized fear of a permanent aristocracy from inherited wealth, then what is the concern specifically? How much inherited wealth is too much?
The closest we've had to an aristocracy in this country in the last century is probably the Kennedys, who were never billionaires.
I'm all for higher estate taxes, but I think we need to be clear and realistic about how much money that will actually generate, and how much it would actually reduce the generalized fear of a monied aristocracy. And this is America, being rich is a great advantage, but it doesn't confer any special nobility.
Finally, if the problem is the divergent growth of the stock market relative to other things on the chart, then it requires carefully considering the factors that resulted in that condition and addressing those. Anything else is a band-aid.
For instance, even if you limit Elon's heirs to 100 million dollars and not 100 bilion, if stocks keep climbing as they have, the heirs will be back to being billionaires soon enough.
I don't know exactly why stocks have done so much better than everything else, but I suspect it's due to the things others here in the comments have suggested. The bigger question is whether this will or can be sustained and whether there will be a correction. It's important to remember that the wealth everyone is worried about is paper wealth, and there is no iron law that says it can never lose value. Yes, the last 15 years have been a great run, but 15 years is not a long time, and it would not be smart to assume that this short pattern can or will continue.
Personally, I'm skeptical that attempts at punitive wealth capture due to the weirdness of the last two decades is wise or necessary, especially in the absence of tying specific policies to specific outcomes while properly accounting for third-order effects.
And when it comes to the markets, many Americans have their futures tied to the stock market in various retirement or investment accounts, either directly or through pension systems (including state-run pension systems). Therefore, care must be taken by those who want to cut down the billionaires a notch to ensure they don't inadvertently destroy the more modest fortunes of the rest of us.
So does this explain the vibecession in a real sense, and to an extent contradict Matt’s theory that “the average American is doing fine financially, actually”? Or are people doing fine yet comparison in a relative sense is the driver of the vibecession?
How about ending the estate tax and having a graduated inheritance tax? It sounds similar but would actually encourage the wealthy to divide the estate into more recipients.
Trusts have to be included in this, but this is obviously part of the solution.
Isn't this precisely what Dubya's "ownership society" was meant to solve? When a majority of middle-class people have either personal savings or pensions in stocks, then the rising stock price really does lift all boats.