{"id":154737,"date":"2026-01-29T10:18:08","date_gmt":"2026-01-29T10:18:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/154737\/"},"modified":"2026-01-29T10:18:08","modified_gmt":"2026-01-29T10:18:08","slug":"an-architect-of-californias-billionaires-tax-says-hes-an-enthusiastic-capitalist-but-the-system-doesnt-seem-to-be-working-hes-got-a-plan","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/154737\/","title":{"rendered":"An architect of California’s billionaires tax says he’s an ‘enthusiastic capitalist’ but the system ‘doesn’t seem to be working.’ He’s got a plan"},"content":{"rendered":"

Brian Galle is not looking to ban billionaires. In fact, the tax law expert and key architect behind California\u2019s controversial wealth tax proposal described himself as an \u201centhusiastic capitalist\u201d in a recent interview with Fortune. \u201cI think capitalism is a great system that probably has, you know, enriched the lives of billions of people,\u201d he told Fortune over Zoom<\/a> from his office in Berkeley, where he teaches courses on tax and nonprofit law<\/a>. \u201cBut I\u2019m not sure that our system is a functioning capitalist system right now.\u201d<\/p>\n

\u201cI\u2019m interested in how things work,\u201d Galle added, \u201cand right now, it [capitalism] doesn\u2019t seem to be working well.\u201d Speaking to Fortune about his forthcoming new book, How to Tax The Ultrarich, Galle said one of its central arguments is that domination by a small number of families leads to \u201cbad economies\u201d that grow more slowly and often have crippling inflation and stagnation.<\/p>\n

Galle, who recently moved to California after a decade at Georgetown Law, helped write the legislative text for the wealth tax bill introduced by Assemblymember Alex Lee to address the state\u2019s significant budget deficit, something the press (including Fortune) called \u201cthe billionaires tax.\u201d While previous versions of the bill received little notice, Galle said he believed this one drew intense scrutiny, especially from ultrawealthy Californians, because it actually has a \u201cpretty good chance of passing.\u201d <\/p>\n

Galle has extensive experience in wealth tax legislation, having previously been involved with a wealth tax bill from Sen. Elizabeth Warren<\/a> when she was a serious candidate for president, and filing an amicus brief with the Supreme Court in 2024 that was cited by Justice Ketanji Brown Jackson<\/a>. He said this should give you an idea of where his beliefs lie on the political spectrum: \u201cthe fact that she was citing it probably tells you what these six Republicans would think about my argument.\u201d This was for Moore vs. United States<\/a>, which upheld an international tax provision while pointedly avoiding a broad ruling on whether \u201cunrealized\u201d gains can be taxed as income, which just so happens to lie at the heart of wealth taxes and what to do about billionaires. \u201cSo probably,\u201d Galle added, \u201cthe Supreme Court would say you can only tax people when they sell stuff.\u201d <\/p>\n

The \u2018when to tax\u2019 question and the many billionaire loopholes<\/p>\n

This is the core problem, though, Galle said: the American tax system allows the wealthy to choose when they pay taxes, a choice they often delay indefinitely. Citing research by economist Emmanuel Saez, Galle noted that billionaires pay an all-in tax rate that is 20% lower than the median American household. While the American tax code may look progressive on paper, he argued, it is very much not in practice, because the ultrawealthy can choose when they sell assets and realize capital gains, triggering taxation. Until then, they can, under the practice known as \u201cbuy-borrow-die<\/a>,\u201d continuously take loans out against their assets to fund their lifestyles. \u201cI don\u2019t know about you,\u201d Galle said, \u201cbut if I go into my Fidelity account, I have a little button I can click that says, \u2018Do you wanna take out a loan against your savings?\u2019 I\u2019m pretty sure it\u2019s even easier for billionaires.\u201d<\/p>\n

Critics of the California proposal, including tech billionaire Palmer Luckey<\/a>, have argued that a wealth tax would force them to liquidate businesses and fire workers to pay the bill. Galle dismissed this as \u201cnonsense,\u201d arguing that for someone with $1 billion in stock, borrowing a fraction of that amount to pay a 1% tax would be simple. Galle also rejects the argument that wealth taxes are doomed to fail because they have been repealed in many countries such as France, pointing instead to successful, sustained models in Switzerland and Spain that closed loopholes for privately held businesses.<\/p>\n

Why have so many wealth taxes been rolled back globally, then? According to Galle, it\u2019s a combination of factors, but one of them is that over time, \u201cbillionaires have learned better and better and their lawyers have learned how to find all the loopholes to really exploit this kind of optionality: Their ability to choose when to pay tax.\u201d Galle allowed that different billionaires have different assets and some are hard to value (in the world of private art collections, as Fortune has reported<\/a>, some investors develop esoteric tastes, like collecting dinosaur bones), but Galle said these are \u201csolvable\u201d in the forms of formulas and appraisals.<\/p>\n

Kent Smetters<\/a>, the Wharton professor and faculty director of the Penn Wharton Budget Model, told Fortune that he agreed that these issues should be solvable and the buy-borrow-die model \u201cprobably is a legitimate issue,\u201d adding that it\u2019s \u201cnot really based on tax principles or coherent tax principles.\u201d <\/p>\n

Smetters, who has previously told Fortune<\/a> that his own research indicates that taxing billionaires wouldn\u2019t bring in as much revenue as commonly believed, allowed that it\u2019s a moral issue to many, and that\u2019s justified. \u201cMy sense is that [wealth tax advocates] still believe in it just because of this principle. And it is true that sometimes the really rich billionaires, they can manage their tax rate\u201d by borrowing against their fortune and not realizing capital gains as they accrue. The key is to tackle what\u2019s called the \u201cstep-up in cost basis,\u201d which is where an heir steps up to the fair market value of their parent\u2019s fortune at the time of death. \u201cThat\u2019s the tail that wags the dog here,\u201d Smetters said, and eliminating that could really undermine some common ultrawealthy tax planning strategies, \u201cand you would probably satisfy some of the concerns that people have about this fairness principle.\u201d<\/p>\n

How to fix it with \u2018FAST\u2019<\/p>\n

The main thrust of Galle\u2019s book, of course, is the \u201chow\u201d to make this actually happen. The California billionaires tax is really just a one-off, for one state with a $100 billion funding gap, he explained. He (and his co-authors) see a federal-level solution, explained in detail in his forthcoming book, called \u201cFAST.\u201d <\/p>\n

Under the FAST plan, the government would wait until wealthy individuals sell their assets to tax them, complying with likely Supreme Court requirements. However, the government would charge an interest rate that retroactively eliminates the financial benefit of delaying the sale. By charging an \u201ceconomically accurate rate of interest,\u201d Galle argued, the plan removes the incentive to hoard assets to minimize tax bills, encouraging the wealthy to sell sooner (this also explains the \u201cFAST\u201d title). This measure would apply only to the top tier of wealth holders, likely those with more than $30 million in assets.<\/p>\n

FAST also tackles the cost basis step-up by replacing the estate and gift tax system with an extra tax bracket for inherited property, \u201cin effect switching to an inheritance tax and carryover basis at death, but again with extra interest charges for taxpayers who delay sale.\u201d This would solve both problems with one fell swoop, he explained.<\/p>\n

Galle acknowledged that the Supreme Court signaled with the 2024 Moore ruling that it may not permit taxing unrealized gains, and explains that his proposal is designed in accordance with what is likely to be legal. But he insisted that these proposals should be seen not as a way to punish success, but as essential maintenance for a capitalist system that is currently skewed by \u201cdisproportionate billionaire power.\u201d He argued that functioning capitalism requires a \u201cfair, functional tax system\u201d rather than the current setup, which allows the wealthiest to opt out of paying their share. While he admits there are no \u201cmagic wands,\u201d Galle insisted that the current tax code is making economic inequality worse, and incremental progress is vital to restoring a healthy economy.<\/p>\n","protected":false},"excerpt":{"rendered":"Brian Galle is not looking to ban billionaires. In fact, the tax law expert and key architect behind…\n","protected":false},"author":2,"featured_media":154738,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[9329,7,9,8,75966,2214,1694,9560],"class_list":{"0":"post-154737","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-california","8":"tag-billionaires","9":"tag-california","10":"tag-california-headlines","11":"tag-california-news","12":"tag-elizabeth-warren","13":"tag-supreme-court","14":"tag-taxes","15":"tag-wealth"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/154737","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=154737"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/154737\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/154738"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=154737"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=154737"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=154737"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}