Sen. Bernie Sanders (I-VT) and Rep. Ro Khanna (D-CA) held a town hall focused on taxing billionaires and the future of AI. (Photo by Benjamin Fanjoy/Getty Images)
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Senator Bernie Sanders (I-Vt.) and Representative Ro Khanna (D-Calif.) introduced legislation this week to impose a 5% annual wealth tax on America’s billionaires. The “Make Billionaires Pay Their Fair Share Act” would apply to U.S. individuals with a net worth of at least $1 billion.
An economic analysis of the bill produced by University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman, relied on Forbes’ real-time billionaire estimates of net worth as of January 1, 2026, when 938 US billionaires collectively held nearly $8.2 trillion in wealth. The report noted that total U.S. billionaire wealth at the end of 2025 was up 132% in just six years. Billionaire wealth has grown particularly fast in the last three years, increasing 22% in 2025, 28% in 2024, and 20% in 2023. Over 15 years, the proposed wealth tax would cut the fortunes of the typical billionaire in half, they calculate.
Sanders, the Ranking Member of the Senate Committee on Health, Education, Labor, and Pensions (HELP), and Khanna say that, in its first year, the bill would provide a $3,000 direct payment to every man, woman, and child in households earning $150,000 or less. The remaining funds would be used “to address the most pressing crises facing working families.” That would include reversing $1.1 trillion in Medicaid and Affordable Care Act cuts in the One Big Beautiful Bill Act (OBBBA) President Donald Trump signed in July, expanding Medicare to cover dental, vision, and hearing benefits for millions of seniors, and building, rehabilitating, and preserving more than seven million affordable homes.
Childcare And Teacher Pay
The proposal would also ensure that no family pays more than 7% of its income on childcare. According to the Department of Labor, U.S. families spend between 8.9% and 16.0% of their median income on full-day care for one child, with annual costs ranging from $6,552 to $15,600 in 2022, the most recent year for which data are available. A report from ReadyNation, a national bipartisan organization, estimates that the lack of affordable childcare costs $172 billion annually in lost productivity, earnings, and tax revenue.
Revenue would also establish a $60,000 minimum annual salary for every public school teacher in America and expand Medicaid home health care for seniors and people with disabilities.
Revenue Estimates And Enforcement
Even assuming a 10% tax evasion or avoidance rate, the tax would generate an estimated $368.5 billion annually—approximately 1.2% of GDP—and roughly $4.4 trillion over the ten-year budget window (2026–2037), the economists estimate. Those projections assume billionaire wealth grows at roughly the same pace as the broader economy. Historically, however, billionaire wealth has grown about five percentage points faster per year. The economists argue that the tax would narrow the gap between billionaire wealth growth and income gains for the average American family.
As for avoidance, supporters argue it would be manageable. Because the tax would apply to fewer than 1,000 taxpayers, enforcement would be relatively targeted. And since this is a federal tax, flight would be limited—it’s not as easy as picking up from one state and moving to another. American billionaires, like all American taxpayers, are subject to tax on their worldwide income. The only out? Renouncing US citizenship, which under existing law would trigger a large exit tax.
The Political And Legal Hurdles
“At a time of unprecedented income and wealth inequality, this legislation demands that the billionaire class in America finally pay their fair share…” Sanders said in a statement, arguing that the tax code favors billionaires over average workers and that extreme wealth concentration threatens economic stability.
As an example, Sanders pointed to Elon Musk, who as of Monday morning had a real-time worth of $833 billion. A one-time tax of 5%, or $42 billion. would leave him with approximately $792 billion. But the economists’ analysis of the proposal also shows the more dramatic impact on billionaire wealth over time. For example, if Musk had paid 5% of his net worth each year since he became a billionaire in 2012, he’d have been worth only $363 billion (instead of $745 billion) at the end of 2025.
Under the proposal, Mark Zuckerberg, with an estimated net worth of $227 billion at the end of 2025, and Jeff Bezos, worth $244 billion at year’s end, would owe $11 billion and $12 billion, respectively. But if they’d paid the tax every year since becoming billionaires, they would have been worth only $90 billion and $61 billion at the end of 2025, the economists calculate. (The impact on Bezos is more dramatic because he’s been a billionaire since 1999, while Zuckerberg didn’t join the billionaire ranks until 2008.)
In all, they figure, at the end of 2025, the 10 richest on the Forbes list, instead of being worth $2.56 trillion, would have had a net worth of just $888 billion.
Despite the projected revenue windfall, the legislation is unlikely to pass. Republicans control the House and Senate and generally oppose major tax increases. Even some moderate Democrats have expressed caution, particularly after recent tax-and-spending proposals stalled.
There are also constitutional concerns. A true wealth tax—one imposed on net worth rather than income—has never been enacted at the federal level. And notably, the Constitution limits direct taxes unless apportioned among the states by population. That issue was almost raised—unsuccessfully—in Moore v. U.S., when the plaintiffs (Charles and Kathleen Moore) originally framed part of their constitutional challenge to argue the Mandatory Repatriation Tax (MRT) under the Tax Cuts and Jobs Act of 2017 was effectively a tax on unrealized income or wealth. However, the Supreme Court’s ruling limited its analysis to the MRT (which it found constitutional) and avoided answering any broader wealth-tax or unrealized-income constitutional questions. That means those arguments are unresolved.
State-Level Wealth Tax Efforts
Nonetheless, wealth taxes continue to gain attention at the state level.
In Khanna’s home state of California, the proposed “2026 Billionaire Tax Act” would impose a one-time 5% excise tax on billionaire net worth, potentially raising $100 billion from more than 200 California billionaires. The tax base is broad, covering private businesses, publicly traded stock, personal assets over $5 million, and retirement accounts over $10 million. (An exception applies to real estate held directly or through a revocable trust, but real estate held in a partnership or included in a business’s value could be affected.)
That revenue would be directed to a dedicated fund, primarily to offset federal Medicaid cuts. Supporters of the proposal must gather nearly 900,000 signatures to qualify the measure for the November ballot in California.
Gavin Newsom, California’s Democratic governor and a potential presidential nominee for the Democratic Party, opposes the tax. Khanna, who has not ruled out a presidential run, backs the state proposal—but with some tweaks.
Newly-elected New York City Mayor Zohran Mamdani has also pitched a plan that would add a 2% surtax on annual income over $1 million for roughly 34,000 of New York City’s highest-earning households, alongside a corporate tax bump, to raise an estimated $4 billion a year to fund universal free early childcare, free bus service, and expanded affordable housing. He argues the city’s current income tax structure is only marginally progressive — topping out at 3.876% — and that asking the top 1% (whom he says take home about 35% of all city income) to pay more would patch holes in revenue while not touching the middle class.
Critics of the New York proposal have warned that millionaires could flee the Big Apple. However, supporters point to data from states like Massachusetts suggesting millionaire mobility is relatively low (and revenue gains are real). Since New York City income tax rates are ultimately controlled by the state, the surtax would require approval from Albany, and Governor Kathy Hochul has signaled that it’s a non-starter. If the revenue raiser doesn’t go through, Mamdani has suggested he’ll find budget revenue by raising real estate tax rates.
Why California and New York? According to Forbes, California has more billionaire residents than any other state. New York comes in second, followed by Florida and Texas. Only three states (Alaska, Delaware, and West Virginia) had no billionaire residents.
