When you look at the math more closely, it seems almost silly. Researchers led by the French economist Gabriel Zucman found that the effective tax rate paid by people with very high net worth is about 0.3% of their wealth. Not money coming in. Lots of money. The kind that has been built up over decades and is protected by complex structures, deferred gains, and carefully managed taxable income that has little to do with how the economy really works. A lot of people in state legislatures can’t ignore that number anymore.
It’s not completely new that support for minimum tax laws is growing, both in the United States and around the world. The specificity is what makes it feel different. Governors and state lawmakers haven’t usually been interested in federal tax policy, but more and more people are asking a direct question: why are states not participating in the federal system if it’s not collecting this money? That’s a good question. When they do come, the answers are often more political than technical.
There has always been a clear reason behind progressive taxation. People who have more money give more to the public systems that helped them have more money. There is no such thing as a free road, court, educated workforce, or stable financial markets. But at the very top of the wealth scale, something goes wrong with this logic. The way the tax code works in real life makes it hard to get money that is never officially realized. There are no rules that billionaires who report small taxable income are breaking. That’s the part that’s hard. The hole isn’t tucked away in the small print. It’s built into the way it works.
When Brazil was in charge of the G20 in 2024, they tried to deal with this directly. It’s important to note that leaders agreed to work together to find ways to make sure that very wealthy people are effectively taxed. The Brazilian government asked Zucman to come up with a plan that said a minimum 2% tax on the wealth of billionaires could bring in between $200 billion and $250 billion a year from about 3,000 taxpayers around the world. Adding in the five-hundred-millionaires makes that number even higher. The numbers here are not guesses. They give a pretty honest picture of how much is slipping through the cracks right now.
The ground is what makes the fight at the state level interesting. Federal tax law is not controlled by the states. But they do have control over how their income is taxed, and there is a growing interest in what some are calling “presumptive income” approaches. These involve taxing billionaires on an assumed economic return on their wealth, regardless of what they report as income. It’s not a new idea. Zucman has said it’s better because it deals with the difference between economic income and taxable income right away, instead of waiting for gains to be recognized.
From what I can tell, the political climate is changing in ways that make these fights more likely than they were five years ago. Now, it’s harder to hide the fact that wealth is getting more concentrated. Oxfam data shows that the richest 1% now control about 31% of G20 wealth, up from 26% twenty years ago. This information has a different meaning in the economy after the pandemic, when many regular people could see and feel this concentration. It’s no longer a good reason to say that taxing the very rich is technically impossible. The OECD agreement on a 15% corporate minimum tax in 2021 showed that international cooperation on these issues is possible, even though it was once thought to be impossible.
It’s still not clear how far efforts at the state level will go or if federal inertia will stop them in the end. The talk has changed, though. The minimum tax loophole isn’t just a small issue that gets talked about in academic papers anymore. It’s still a political issue, and more governors are ready to sign on to it.