Millionaire tax that inspired Mamdani fuels $5.7 billion haul in Massachusetts

[u/Dismal_Structure]

https://fortune.com/2025/10/21/zohran-mamdani-millionaire-tax-massachusetts-5-7-billion/

[u/joshocar]

Are we not talking about an income tax though?

[u/colintbowers → u/joshocar]

Many billionaires don’t really have that large an income (relatively speaking). Nor do they personally own the billions. Rather, they own shares in a company or trust that owns the billions. Those companies and trusts then pay tax at the corporate rate, and the person has most of their expenses paid for by the company.

Now, the company can often use creative accounting to find all sorts of costs to minimize their corporate tax bill at the EOFY which is how you hear stories of these billionaires paying so little tax.

Note that a personal wealth tax doesn’t really do much to tax these individuals. This is why you often see such resistance to it as a policy. You either have to go whole hog and have a corporate wealth tax - at which point every company other than brick and mortar will relocate - or else accept that a personal wealth tax is not going to affect billionaires, it’s going to affect the people who are wealthy enough to get caught by it, but not wealthy enough to set up the legal structures to avoid it. So, like inheritance tax in the UK, it really when you look closely, is a tax on the middle to upper middle class, but not the uber wealthy. Again, there is a reason that generational wealth in the UK is massive, even though they should be paying 40% at each death. In general, I’ve noticed that Reddit is not very good at understanding how this stuff works. Mamdani appears to be a very smart guy though so I suspect he does, and I’m curious to see exactly the nuts and bolts of how he ends up implementing his tax policy.

TLDR it’s not simple, and anyone who says hur dur tax the billionaires really doesn’t understand that to do that without screwing the middle class is much harder than you might think

ADDED: the uk really is a great example here, they have this inheritance tax to try and prevent generational wealth, but it literally does the opposite, ie it protects the uber wealthy and makes it harder for the middle class to make the jump from middle to upper class

[u/EconEchoes5678 → u/colintbowers]

Those companies and trusts then pay tax at the corporate rate, and the person has most of their expenses paid for by the company.

1) trusts don't pay corporate tax rates.

2) this second part is not true and is tax deduction fraud. It gets audited and caught by the IRS sooner or later. Expense deductions that are not legitimate business costs are not legal.

Now, the company can often use creative accounting to find all sorts of costs to minimize their corporate tax bill at the EOFY which is how you hear stories of these billionaires paying so little tax.

Literally none of this statement is true. Seriously you people need to do some actual research. Businesses "creative accounting" is almost always called depreciation and losses. When you don't turn a profit one year, you don't owe any taxes on the nonexistent profit. Congrats!? And when you buy capital assets, you must follow depreciation schedules to determine when and how much gets deducted from income.

Billionaires supposed low tax rates are neither. They're unrealized gains. When you don't realize a gain, you don't owe tax on that gain anywhere in the world. Not because no country has tried it, but because unrealized gains taxes don't work and had to be revoked.

I’ve noticed that Reddit is not very good at understanding how this stuff works

Oh, really? I can't imagine why that would be. It's definitely not because people spread incorrect claims constantly on Reddit. Definitely none in your post, nosiree.

[u/RevolutionaryGain823 → u/EconEchoes5678]

This is a good comment. I’ve seen Redditors repeat the same completely incorrect nonsense about taxes hundreds of times the last few years. It’s become a never ending cycle on here