Brian Gahler doesn’t plan to ban billionaires. In fact, the tax law expert and key architect behind California’s controversial wealth tax proposal described himself as a “passionate capitalist” in a recent interview wealth. “I think capitalism is a great system that, you know, has probably enriched the lives of billions of people,” he told wealth Exceed skyrocketing in his office at Berkeley Teach tax and nonprofit law courses. “But I’m not sure our system is a well-functioning capitalist system right now.”
“I’m interested in how things work,” Galle added, “and right now, it (capitalism) doesn’t seem to be working very well.” Speaking wealth About his upcoming book, How to tax the super richOne of its core arguments, Galle said, is that rule by a few families leads to a “bad economy,” with slower growth and often high levels of inflation and stagnation.
Galler, who recently moved to California after a decade at Georgetown Law School, helped write the legislative text for Assemblyman Alex Lee’s wealth tax bill to address the state’s massive budget deficit, an issue that has been covered in the media (including wealth) is called the “billionaire tax.” While previous versions of the bill drew little attention, Galle said he believes this one has been heavily scrutinized, especially by ultra-wealthy Californians, because it actually has “a pretty good chance of passing.”
Galle has extensive experience in wealth tax legislation, having previously served on Wealth tax bill involving Sen. Elizabeth Warren when she was a serious presidential candidate and filed an amicus brief with the Supreme Court in 2024 stating Judge Ketanji Brown Jackson cited. That should give you an idea of where his beliefs sit on the political spectrum, he said: “The fact that she cited it might tell you how those six Republicans would view my argument.” This is for Moore vs. United StatesThe bill upholds an international tax provision while explicitly avoiding a broad ruling on whether “unrealized” gains can be taxed as income, which lies at the heart of wealth taxes and how billionaires are treated. “So most likely,” Galle added, “the Supreme Court will say you can only tax people when they sell them.”
The “when to tax” question and the loopholes for many billionaires
Still, Galle said, this is the core problem: The U.S. tax system allows the wealthy to choose when to pay taxes, a choice they often postpone indefinitely. Galle cited research by economist Emmanuel Saez that found billionaires pay a total tax rate that is 20% lower than the median U.S. household. He argued that while the U.S. tax code may appear progressive on paper, in practice it is not because the ultra-rich can choose when to sell assets and realize capital gains, triggering taxes. Until then, they can follow what is known as “buy-borrow-die“, constantly taking out loans against their assets to support their lifestyles. “I don’t know about you,” Galle said, “but if I go into my Fidelity account, I see a little button that I can click that says, ‘Do you want to take out a loan against your savings?’ I’m pretty sure that’s easier for billionaires. “
Critics of California proposal include tech billionaires Palmer Lackeyarguing that a wealth tax would force them to liquidate businesses and lay off workers to pay the bills. Galle dismissed this as “nonsense,” arguing that it would be simple for someone with $1 billion in stocks to borrow a fraction of it to pay the 1% tax. Galle also dismissed the argument that wealth taxes are doomed, as they have been abolished in many countries such as France, pointing to successful, ongoing models in Switzerland and Spain that closed loopholes in private enterprise.
So why have so many wealth taxes been eliminated around the world? Galle says this is the result of a combination of factors, but one is that, over time, “billionaires have learned better and better and their lawyers have learned how to find all the loopholes to really exploit that selectivity: their ability to choose when to pay taxes.” Galle acknowledges that different billionaires own different assets, some of which are difficult to value (in the world of private art collections, such as wealth reportedsome investors develop esoteric tastes (such as collecting dinosaur bones), but Galle says these can all be “solved” in the form of formulas and valuations.
Kent SmythesWharton professor and chair of the budget modeling department at the Wharton School of the University of Pennsylvania tells us wealth He agreed that the issues should be solvable and that the buy-borrow-die model “could be a legitimate issue”, adding that it was “not really based on tax principles or coherent tax principles”.
Smetters, he has told before wealth His own research shows that taxing billionaires doesn’t bring in as much revenue as widely believed, which makes sense for many people and is a moral issue. “My sense is that (wealth tax advocates) still believe in that principle, just because of it. It’s true that sometimes really wealthy billionaires, they can manage their tax rates by borrowing against their wealth” rather than realizing capital gains as they accumulate. The key is to address the so-called “cost basis step-up,” in which heirs step up the fair market value of their property to fair market value at the time of their parent’s death. “That’s the tail that’s wagging the dog,” Smythes said. Eliminating that might indeed undermine some common tax-planning strategies for the super-rich, “and you might satisfy some of the concerns people have about that equity principle.”
How to fix it with “Quick”
Of course, the gist of Galle’s book is “how” to achieve this. He explained that for a state with a $100 billion funding shortfall, the California Billionaires Tax is really just a one-time thing. He (and his co-authors) see a federal-level solution, which he explains in detail in his upcoming book called “FAST.”
Under the FAST plan, the government would wait until wealthy individuals sell their assets before taxing them, in line with a possible Supreme Court requirement. However, the government will charge an interest rate that retroactively eliminates the financial benefit of delaying the sale. Galle argued that by charging an “economically accurate interest rate,” the scheme removes the incentive to hoard assets to minimize taxes and encourage wealthy people to sell sooner (which explains the “FAST” moniker). The measure only applies to top wealth holders, likely those with assets in excess of $30 million.
FAST also addresses the cost basis escalation issue by replacing the estate and gift tax systems with additional tax brackets on inherited property, “effectively moving to estate tax and carryover basis at death but with additional interest charges on taxpayers who delay the sale.” This would solve both problems in one fell swoop, he explained.
Galle admits Supreme Court has issued 2024 Moore ruled that taxes on unrealized gains may not be allowed, explaining that his proposal was framed in terms of what might be legal. But he insisted the proposals should not be seen as a way to punish success but as necessary maintenance of a capitalist system currently distorted by the “disproportionate power of billionaires”. He argued that well-functioning capitalism requires a “fair, functional tax system” rather than the current system that allows the richest to choose not to pay their share. While Galle acknowledged that there is no “magic wand,” he insisted that current tax laws are exacerbating economic inequality and that incremental progress is critical to restoring a healthy economy.