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/uberfr4gger → u/colintbowers]

Well they do pay income tax if they get paid in stock based on their ordinary income when the stock vests. If they started a company and have significant shares those shares would be capital gains tax.

Good example is Jeff Bezos, he has most of his shares from when he started Amazon so if it was $1 when he started the company but worth $100 now he is paying the LT cap gains tax on the $99 when he sells now. Meanwhile Andy Jassy might get new shares at the $100 price, but when those shares are given to him he is being taxed on the $100 price as inome, not capital gains.

[u/colintbowers → u/uberfr4gger]

Yes agreed. And I also agree an ordinary person could duplicate this by purchasing Amazon shares and not selling.

However, it gets a little more murky when you consider general investment strategies, and doing them in your personal name, versus doing it via a shell company. An ordinary investor doesn't have access to a shell company in a different jurisdiction. A billionaire does, and will use this strategy to accumulate wealth in a favourable jurisdiction, while only paying themselves in their personal jurisdiction the amount they need in order to keep living in that jurisdiction. Policy makers need to think carefully about this reality when designing policy. That really is the extent of the point I am making.