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Agitate against tech billionaires. Against oil companies toasting the planet for profit, and the politicians they’ve bought. Agitate against racism, fascism, and the new feudalism.
AGITATION NATION, the podcast featuring America's agitators, scientists, activists, and insurgent thinkers working for a better country. Hosted by David Fenton, from the Fenton Forecast newsletter.
Agitation Nation, Episode 002: Emmanuel Saez
R.R. Robbins (00:00.11)
Coming up on this episode.
Emmanuel Saez (00:01.612)
The only tax on billionaires that Gavin Newsom is gonna accept is exactly zero.
R.R. Robbins (00:06.954)
Agitation Nation, where billionaires are using their algorithms to divide us and their money to buy our politics and our government. California has more billionaires than any state, over 200 of them. They've tripled their wealth in three years into the trillions, all while paying a lower tax rate than their assistants. When Trump cut the taxes of the richest again, he slashed Medicaid from our poorest to pay for it. But the rebellion has begun. This November, California votes on Proposition 40, the first billionaire wealth tax in America. 1% a year for five years, raising $20 billion a year for the state's healthcare system. Nvidia's Jensen Huang says he's fine paying it. Google's Sergey Brin has spent $102 million to kill it.
Today's guest is Emmanuel Saez, the Berkeley economist who wrote it. He spent 25 years studying how billionaire wealth destroys democracy. Now, with his ballot initiative, he's in the fight. In this episode: why Governor Newsom is fighting his own party on the tax, why these billionaires can't just move to Texas, and what should the richest pay for a better country?
Your host is David Fenton, activist and agitator for over 50 years, a pioneer in the use of PR and advertising for social change. This is Agitation Nation.
David Fenton (01:29.166)
Greetings, Emmanuel. Thanks for being with us. So, two centuries ago another Frenchman, Alexis de Tocqueville, when he was in America, warned of a quote, manufacturing aristocracy, and permanent inequality in America. He called it one of the harshest to exist. You're a French economist warning of a new aristocracy. Describe the moment we're in.
Emmanuel Saez (01:31.256)
Thank you, David.
Emmanuel Saez (01:52.862)
The US has experienced an extraordinary rise in income and wealth inequality. So the big picture is that at the beginning of the 20th century inequality was high. Thanks to policy development, it went down substantially, so that by mid-century actually the United States was a fairly equal country. This changed around 1980, and over the last four or five decades the US has experienced a continuous rise in inequality.
So it started with CEO pay exploding, the high-level compensation going up much, much faster than regular wages. Over the last 20 years, this has become more of a wealth phenomenon. That is, what has really stood out is the extraordinary rise of the wealth of what we can call, you know, the billionaire class, that is the very thin layer at the very top of the wealth distribution.
Their wealth has grown, you know, in the United States over the last 40 years much faster than the economy. About, you know, six percentage points faster per year on average. So six percent one year doesn't look that big, but when you cumulate that over more than 40 years, it makes an extraordinary difference. So it compounds, exactly, so that if you...
David Fenton (03:12.11)
Compounds.
Emmanuel Saez (03:16.376)
Take the case of the US. Now billionaire wealth relative to the average income is twenty times higher than what it was around nineteen eighty. And that phenomenon has been particularly extreme in the case of California. You know, thanks to the tech boom, now the AI boom, there has been an extraordinary surge in billionaire wealth in California.
So much that if you look at the Forbes numbers, Forbes magazine maintains a list of billionaires across the United States, there are about 250 of them in California, and they have more than two trillion in wealth. Two trillion is an enormous amount. You know, it's half the annual California GDP.
And so extraordinary wealth at the top comes with extraordinary power to influence society as well. We know those billionaires, they've created those enormous multinational companies, you know, social media, Google, Facebook, Nvidia, related to technology, and they have an enormous influence on the world.
More recently, we've seen also throwing their wealth around, you know, to influence political outcome. Famously, the Trump campaign was funded, almost half of the funds he got for his presidential campaign came from billionaire wealth. You saw billionaires literally entering government. I mean, you can't make this up. You know, the richest men in the world, Elon Musk, funds the Trump campaign and then has, you know, an enormous influential role in literally slashing whatever he wanted in the federal government.
David Fenton (04:57.324)
The amount that the billionaire wealth in California has increased in just the last few years is really striking. You wanna run that by us, please?
Emmanuel Saez (05:04.834)
Yes. So in California, billionaire wealth has exploded, both in the short run and in the long run. So in the short run, with the AI boom, their wealth has been multiplied by almost three. So just in the last three years and a half, we've seen almost a tripling of California billionaire wealth.
David Fenton (05:27.438)
So if it's two trillion now, it was seven hundred million.
Emmanuel Saez (05:31.275)
Between seven hundred and eight hundred billions just a few years ago. And now we're at two point three trillion, to be precise.
David Fenton (05:38.68)
This is an incredible expansion. I don't think most people's paycheck have gone up threefold in three years, and it puts into context what you're doing now. You have put a tax on California's billionaires on the November ballot. Give us your elevator pitch for this wealth tax. And what is it? What does it do? Why does it matter now?
Emmanuel Saez (06:00.106)
So let me explain this California billionaire tax ballot initiative that voters will decide upon in November this year. So it came from the very large Medicaid cut that was passed by Congress and the Trump administration about a year ago. So to fund tax cuts benefiting actually mostly high-income earners, they needed to cut spending, and they really slashed into Medicaid, which is the government-paid healthcare insurance for lower income Americans.
So just in California, 30% of Californians get their health insurance through Medicaid. It was the cornerstone of the Obamacare expansion that allowed the rate of uninsured people to go down dramatically. We had reached an uninsured rate of only 6%, which is the best we've had. You know, it was almost 20% before Obamacare.
The federal government cuts Medicaid by 1 trillion over the next 10 years. That means that for California, the cut is almost 200 billion over the next 10 years. We are going to miss 20 billion of federal funding for Medicaid. So if we do nothing, what's going to happen is that a lot of people are going to lose their Medicaid health insurance, and they are going to struggle to find anything else affordable. So it's been estimated that within a few years the people without health insurance will go up from six percent today, a very good number, up to ten percent, reversing half of the progress with Obamacare.
Okay, so we're missing 20 billion per year, but we are a very rich, wealthy state. If the federal government retreats, in principle the state can decide, you know, to tax and spend to replace the lost funding. In California, it is extremely difficult to tax and spend through the normal legislature way, because you need a two-third majority in both chambers, and that's very hard to bring together. So effectively, over the last 20 years, when there was a revenue need for a spending program, it's come through the ballot process initiative. So that's what we're seeing here, driven, you know, by the healthcare union, which is very worried...
Emmanuel Saez (08:19.178)
...about so much Medicaid funding loss that's gonna affect, you know, hospitals, especially in disadvantaged areas. So they wanted to find a way to replace this funding, and they decided to fund this in a progressive way.
California already has a pretty good individual income tax system. That is, here in California we tax high labor income earners pretty well. We have a top tax rate of 13.3%. That's the highest in the country. So we tax millionaires well. So it's hard to further increase this tax rate. Where the tax system fails in California, as well as in the federal government, is really for the billionaire class. It turns out that they are undertaxed relative to high-income earners, you know, that are not quite as wealthy.
So you see the combination of those two things, their wealth surging so much that there is now a ton of potential revenue from the billionaire class, combined with the fact that they pay relatively low taxes, made the billionaire tax, you know, the natural target, you know, to find that lost federal funding of 20 billion per year.
So we've talked about how much wealth they have. They have more than two trillion. So if you can just get 1% per year, 1% of more than 2 trillion is $20 billion. So that's exactly what we need to replace that lost funding. And that's how the tax came to be. The tax, it's gonna be five percent but spread over five years, so that you pay one percent per year, and that solves that funding problem for the next five years.
David Fenton (10:00.846)
Just to make this a little more clear for people, billionaires don't pay taxes because they don't get paid in regular income like the rest of us. And in fact, in our system, they can hold on to enormous amounts of stock wealth and never be taxed on it. Literally never. And they borrow against it, so they live without income. So that's why their tax share is less than many university professors and janitors.
So this is really why I believe you're doing this. So it's one percent a year for five years. That's the proposal that the voters will face. Is that right?
Emmanuel Saez (10:37.358)
Correct. Let me expand, if you want, a little bit on why they pay low taxes. Taking perhaps the example of the Google founders, Sergey Brin and Larry Page. 95% plus of their wealth comes from Google, now it's called Alphabet stock. Google pays almost no dividends, so they don't get dividend income, you know, taxable at the individual level. They don't get executive compensation either from Google. So they generate taxable income only when they sell Google stock. And relative to the enormous gains they've been making, they sell a minuscule amount, literally, you know, to fund their private consumption. If they want to influence society by giving to charity, they give it, and therefore it doesn't generate income, it's not taxable. So they can get away with enormous wealth gain with paying very little.
If you take the billionaire class, you know, as a group in California, we estimate that the individual income tax they pay is only something like three to four billion, which amounts to 0.2% of their wealth. So one-fifth of one percent of their wealth per year. And as we were discussing earlier, their wealth has increased, you know, has tripled over the last few years. So really the tax take with the individual income tax of the billionaire class is really minuscule.
And that's why, just to restore, you know, a fair tax system where the billionaire class pays according to its ability to pay, we really need a tax specifically designed to hit the billionaires. And obviously, you know, the wealth tax on billionaires is the most direct way to accomplish this.
David Fenton (12:23.8)
Let me put this in perspective for people. Sergey and Larry, the Google co-founders, who've done a lot of good for the world, let's acknowledge that. I believe they are now each worth approximately two hundred and seventy-five billion dollars. Do I have that about right?
Emmanuel Saez
Correct.
David Fenton (cont.)
And Google stock has gone up fifty percent in the last year. So they have five hundred and fifty billion dollars. You're talking about them paying one percent of it a year for five years. That's less than they pay their investment advisors. They pay their hedge fund managers 2% plus a percentage of the gains, and they pay it to them whether they win or lose. So it's kind of surprising, frankly, that the don't-be-evil people are so unempathetic that they're unwilling to give up one percent a year of their vast, incredible wealth, and they're fighting you tooth and nail. I'm really, frankly, quite surprised.
Emmanuel Saez (13:15.566)
My reaction to this is that they are a group that pays very little taxes, as we've discussed, and therefore this wealth tax proposal is a shock to them, because for the first time they are gonna be asked to pay, you know, a substantial amount. Modest relative to the gains they've made, but still, you know, large relative to the taxes they currently pay.
And it's almost as if they were living in a world where, okay, billionaires, you don't touch them. And now they see that it's gonna be a democratic process where literally voters are gonna decide to abolish tax privilege of billionaires by, you know, enacting billionaire targeted tax. So it's a scary moment for them. That's why I'm not surprised, you know, by their opposition.
David Fenton (14:04.334)
But not all of them. I mean, Jensen Huang from Nvidia has said he's willing to pay it to live in California. So, you know, there is a split. So you have a MacArthur Genius Award, you have a Clark Medal. You could have stayed an academic economist, and instead you've gotten yourself in a knife fight in California. Tell us why. Why are you doing this?
Emmanuel Saez (14:26.61)
It is true that by inclination I'm more the academic who likes to sit in his office and crank the numbers. But you know, I've been following the evolution of inequality year after year in the United States for 25 years, and that is really the fact that has radicalized me. The fact that over the last decades, you know, there have been a lot of policy discussion, it's been part, you know, of the public debate for a very long time, but we haven't seen policymakers come up with solutions that really address the problem.
So that's why I felt like it was my duty, literally, that whenever politicians wanted to have bold new proposals, I would be there to help and advise them. And actually it started really with the presidential primary campaign where Elizabeth Warren and Bernie Sanders started proposing, you know, very significant wealth taxes on the ultra rich.
David Fenton (15:27.822)
Speaking of politicians, as you know, the governor of California, Gavin Newsom, is opposed to this wealth tax. He's campaigning against it. Just recently, on the very day that you qualified for the ballot, he came out in favor, he said, of a national wealth tax. You know, normally he says, well, you know, good things start in California. So what do you think happened here?
Emmanuel Saez (15:48.6)
I wasn't surprised by the opposition of billionaires. What surprised me more is the wide opposition to the billionaire tax idea by a really large part of what we could call, you know, the establishment. That includes, you know, a large number of Democrats, and Gavin Newsom fits in there.
And that, in my view, you know, the simplest explanation is the influence that billionaire class has on a lot of the establishment, and in particular, you know, the political establishment. I've seen it myself, you know, being an academic. Billionaires also have a lot of influence in the university. I've talked myself to billionaires. We've had to talk to them, you know, for funding. As you know, they fund a lot of charitable causes. So they really know, you know, who are the power brokers, and they make sure, you know, to cultivate them.
And that's why all the previous attempts that tried to run through the legislature in California, you know, some wealth tax bills were introduced, fail, utterly fail, because most of the elected officials got convinced, you know, by billionaires that the current status quo was very good and that nothing should be done here. And that's why, to do something, it really needed to be a direct democracy, you know, through the ballot mechanism.
David Fenton (17:10.488)
The healthcare workers union, SEIU, that's backing this proposal of yours, offered to Newsom to drop the tax to two percent if it would be legislated, and he said no. So what does that tell you?
Emmanuel Saez (17:23.554)
What that tells me is that the only tax on billionaires that Gavin Newsom is gonna accept is exactly zero. He literally doesn't want them to pay a penny more. And frankly, if you worry about the rising power of oligarchy, as he said himself, you know, the next day, that position is untenable.
As you mentioned, Gavin Newsom, when he was campaigning for governor here in California, he was extremely proud of saying big changes happen here in California first. And frankly, that's one of them, in the sense that this ballot could be a turning point, because for the first time it's a concrete, very simple policy proposal that starts fighting back against the billionaires.
David Fenton (18:13.068)
I'm disappointed. I'm glad to see he came out for it nationally. I hope that if he becomes president he does that. I mean, that's a good thing. Of course, his argument is that you can't do this state by state because the billionaires will leave. Now, I know you've answered this many times before. Could you give us a brief explanation of why you think he's mistaken about this? You've taken a lot of measures in here to make it so that they can't leave. You made it retroactive, you have very stiff penalties for any kind of misrepresentation. Can you tell us briefly how you respond to that argument?
Emmanuel Saez (18:46.07)
It is true that you can move from one state to another, so states often face, you know, that concern that if you do a policy that's too progressive in one state, you're gonna chase away your high income, high wealth people. I should say, first thing is that California or New York have the most progressive income tax systems in the country, and yet they are heavily overrepresented in terms of high income earners. So the fact that any state doing a progressive policy is a disaster is not borne out by the experience.
So it's more like a political argument. And Republicans, at least, they are consistent. They are gonna make it for the billionaire tax, but also, you know, for the millionaire tax in California, or for climate change regulations, you know, that happen in one state. They make it across the board. And it's a vastly exaggerated argument, because California has done very well, you know, or New York have done very well with millionaires in spite of their very progressive taxes.
Now, because we knew this concern of mobility would be there, we designed the tax precisely to minimize the risk of mobility. And so the way it was done is that any billionaire who is a resident as of January first of this year, so six months ago, January 1st, 2026, will be liable for the tax if he is a billionaire by the end of the year, regardless of whether he moves or not in 2026.
So effectively, to escape the tax, you needed to move before January 1st, 2026. And because the proposal was announced in late November, that effectively left a one-month window for billionaires to leave. And we set it up that way because all the experts, the tax accountants that work with wealthy folks, you know, to help them with their residency moves and changes, are clear on that point. It's impossible, if you're heavily involved in a state like most billionaires are, to cut your ties with California, to sever residency within one month. So it's not just about buying real estate in another state. You need to...
Emmanuel Saez (21:05.656)
...cut your professional ties, and also make your primary residence the other state. All your social links, you know, should be moved to the other state. We basically believe that it's almost impossible unless you are really prepared. We don't think billionaires, in spite of what the press reports are saying, will be able to pull it off.
It is true that in the long run, you know, if this were an annual tax repeating itself year after year, some billionaires may choose to leave.
David Fenton (21:33.762)
I mean, for more than one percent of your...
Emmanuel Saez (21:36.134)
Yes. You see, so this one is based on a retroactive residency. But if the state were to later on introduce a new permanent wealth tax, there could be some mobility. That is, a retired billionaire who doesn't need to work day in, day out in California could possibly leave. So that's why it is true that states don't have as much power, basically.
David Fenton (22:00.034)
Yeah, well, that's why they're the laboratory to get these things started. Ultimately we have to have national wealth taxes. Isn't it true that you've also calculated that if some left, the loss in income taxes would be minuscule compared to the amount raised through the wealth tax?
Emmanuel Saez (22:16.142)
Because billionaires currently pay very little California individual income tax, three to four billion a year. Even if we lose some of them or many of them, you see, the loss individual income tax is gonna be a fraction of those three to four billion. The legislative office said possibly, you know, a few hundred millions per year. So that's a fraction of a billion, very small, relative to the one hundred billion revenue that we are expecting. So that's why all those arguments that Governor Newsom himself, you know, is repeating, we see them frankly as propaganda people are peddling to try and defeat this initiat...
David Fenton (22:55.15)
Well, I hope he changes his mind. In my book, The Activist's Media Handbook, I talk about how stories need heroes and villains to teach people. And you are going up against two hundred or so billionaires who are not held in high regard by the public. You have Bernie Sanders behind you. I hope, I expect you'll get some other celebrities involved in this. And so you're really gonna have a classic good versus evil.
You know, I know a few California billionaires and others, and you know, some of them do a lot of good work. I am surprised by how vehemently opposed to this very minuscule tax some of them seem to be. I hope they'll change their mind too, but I guess I doubt it. Emmanuel, what did you give up personally? You're under enormous attack. Are you comfortable with the trade that you made to do this?
Emmanuel Saez (23:44.46)
Whenever you produce academic work that's used in the public debate, you know, in particular, you know, to support policies, so in my case, you know, progressive tax policies, you're gonna be attacked. I think being attacked in the public sphere is actually a sign of success. That is, you've done something opponents think is dangerous, threatening, and hence their need for attack.
I should say as well that myself, I'm in the front line, you know, on the academic front. Perhaps not, you know, the first line, you know, of the folks, you know, the union members who sponsored the initiatives. So colleagues of mine, like Gabriel Zucman, who is on social media and helping, you know, boost the social media operation for the campaign.
But yes, it's an intense moment. But at the same time, you know, look, I've studied inequality all my life. Finally we can do something about it. You have to be excited, even though it is for sure a stressful moment as well.
David Fenton (24:45.89)
You wrote a book that has injustice in the title, so I guess you feel it personally.
Emmanuel Saez
Yes.
David Fenton (cont.)
As opposed to Elon Musk, who says that we shouldn't have empathy, empathy is a problem. So thank you for your empathy. You've said that we've had billionaire capture of politics, and that these people will resist any legislative effort to tax them, which is why you've gone to the ballot. What does this say about the state of our democracy? You know the quote attributed to former Supreme Court Justice Louis Brandeis, that you can have a democracy or you can have great concentrations of wealth, but you can't have both. What does this say to you about the state of American democracy?
Emmanuel Saez (25:25.582)
I do think that yes, any democracy that faces a very high concentration of income and especially wealth is gonna have challenges, basically because wealth transmutes, you know, into power at the very top. And democracy is our attempt as humans, you know, to have the most possibly distributed political power. So those two things are obviously gonna clash.
You can see, you know, this ballot initiative, you know, some people have framed it as democracy versus oligarchy. It's literally pitting one person, one vote against oligarchs who have tremendous influence, because they can convince, you know, the establishment to campaign against, and they can also directly fund the campaign against with their millions, if not hundreds of millions.
It's gonna be an important battle. We'll see how it comes out, but it shows that fight. Even if we fail, we shouldn't despair. You know, the fact that our democracy allows us, you know, to fight this battle at the ballot box is already a big achievement. We've seen in the past, you know, democracies of a century and a half ago were half democracies, because they were giving a lot more power to the high income, wealthiest people. Literally, you know, you had poll taxes needed, that you needed to be rich enough to be able to vote. As a result, the outcome of that was often, you know, policies that preserved the oligarchy. In America, formally we're still a democracy. Anybody here, any citizen, resident of California, can vote. So that's our opportunity.
David Fenton (27:10.518)
Now we have, of course, a Supreme Court that's changing the definition of democracy away from one person one vote to one dollar one vote, which is outrageous. And as you know, they just lifted basically all spending caps for their oligarchic buddies. It's a tragedy to see this court so corrupted. I mean, you know, I think you'd agree with me, this is basically un-American. We're supposed to be the anti-tyrannical country, and here we are enshrining, you know, a new aristocracy. I thought that was supposed to happen in France.
AI is minting more billionaires, and it's happening really fast. Does this change your math? Is what you're talking about doing enough?
Emmanuel Saez (27:55.384)
You have to see the California initiative as a first step. Here we're not talking about reversing the extraordinary wealth concentration we've experiencing, because as we discussed earlier, taking 5% is minuscule when you look at the enormous increase, you know, like a tripling over just the last few years. So we can't hope that this wealth tax by itself will be sufficient.
As a first experience, it is fundamental, because if it works, namely it passes, and the tax successfully raises revenue and it's not overturned by the court system, it will have demonstrated that there is a tool right there to fight back against billionaires, to be used, hopefully, you know, later by the federal government, as Gavin Newsom himself proposed, and as well as other countries.
David Fenton (28:54.872)
They'll still be billionaires. They'll just be paying a fair share of taxes.
Emmanuel Saez (28:58.902)
Yes. I mean, you know, very simply, the fact that their wealth increases so fast, you know, on average, we discuss, you know, six points faster than the economy. So that means just to stabilize them relative to the size of the economy, you'd need a five to six percent wealth tax every year on billionaires.
David Fenton (29:18.926)
I mean, America, as you know, has become a bit of a jungle for the average person. No health care, you know, expensive education, crushed in student debt, you know, low wages, part of why we have so many poor people getting health care from the state. It's really the jungle compared to some other industrialized countries. And it didn't used to be this way. We used to have much higher taxation on the wealthy, and we used it to build the infrastructure and the success of the country for everyone, including them.
You know, now this is starting to happen elsewhere. As you know, Massachusetts passed a four percent surtax on millionaires, and it brought in twice the public revenue that was initially forecast. In New York, Governor Hochul and Mayor Mamdani have just passed a so-called pied-a-terre tax, to tax apartments of wealthy people who don't live there full time, which I really applaud. And by the way, it looks like I may be subject to that tax, because I have an apartment in New York, and I'm happy to pay it for the right to participate in the great city of New York. So do you think this is gonna happen more? Do we have other examples?
Emmanuel Saez (30:29.442)
So it's obvious that the fact that wealth is concentrating at the top and the social state in the United States is far from complete. You know, we still have a lot of people uninsured who don't have access to the basic right, you know, of healthcare. It means there are gonna be a lot more, you know, democratic demand for finding progressive revenue sources, and therefore those type of initiatives are gonna come back.
And you know, I agree with you that the New York initiative is very good. It's good that Massachusetts, you know, passed the millionaire tax. But I like to boast that the California billionaire tax is really an order of magnitude different, because for a billionaire, you know, the apartment in New York is a very small thing.
David Fenton (31:22.382)
A trifle. We used to go after monopolies and break them up. This also prevented excessive concentrations of wealth. We used to boost unions so that workers had leverage and could bargain for living wages, and less of a insane ratio where a CEO of a company makes three, four hundred times what the average worker at the company makes.
We used to have a period that economists called the Great Compression, the aftermath of World War Two, when we had the least amount of income and wealth inequality pretty much any country at any time. And that's when this country really boomed and we had shared prosperity. The Scandinavian countries that have higher taxes and higher benefits, but also are doing extremely well. This is your field. How are we gonna make America a more fair country and yet maintain our economic dynamism?
Emmanuel Saez (32:14.606)
To answer that, we need to look at our great history here in America, as well as around the world. So let me remind our audience that America in the late 19th century, you know, the Gilded Age, looked a lot like what we are seeing today, with robber barons having created huge monopolies, you know, for railroads, for oil, etc., for all these new big industries, and concentrating wealth, squeezing, you know, their workers, their customers, influencing governments.
So how did the US succeed in breaking, you know, that first Gilded Age? It happened in two or three steps that you've briefly alluded to. You know, Teddy Roosevelt, early 20th century, breaks the monopolies by saying, you know, a monopoly shouldn't happen. If you're a monopoly, we're gonna break you. Frankly, that's what we need for many of those tech companies that have become too global and also actually harmful for the customer. That is, when their pursuit is purely profit, they end up being obsessed by selling ads, and to sell ads they need to addict, you know, the users, our children. So that needs to be regulated. So it's a mix of regulating monopolies and regulating harmful product, like we did for tobacco, that we need.
The second step in US history comes after World War I, you know, when the US is the first country to really develop very progressive taxation, progressive income tax, the progressive estate tax, and large corporate taxes on profits. Actually, that's the first country in the world to do it, as early as 1917. It disappears, but then it comes back with the federal FDR administrations during the Great Depression and World War II.
And the third step is the one you mentioned, is boosting unions, so that when there is economic growth they can make sure, you know, the workers get their fair shares. And that mix of policies, no monopolies, progressive taxation, union power, coincides with the era of the best...
Emmanuel Saez (34:37.545)
...economic growth experience that the US has experienced, you know, those decades during and after World War Two, where growth was extremely good and particularly, you know, very broadly distributed, you know, shared prosperity, as you said.
So unfortunately a lot of that has disappeared in the US, but it survives, or some aspects of it survives, in European countries. And I do think the Nordic countries you've mentioned, Norway, are the best example of how this can be achieved while maintaining, you know, the highest standard of living. So in some sense, we're in an easier position than in the first Gilded Age, because we have those examples.
David Fenton (35:20.778)
As a nation, in the aggregate, we're much wealthier than we were then. There's a lot more to go around. Incentives for wealth creation are important. We're not talking about total equality, you know, all this false propaganda. That's another thing, of course, that all this wealth money does, is it spreads propaganda to justify itself, and it's really infected people.
I mean, for example, the top tax rate on the highest earners, I believe over the equivalent of about five million dollars a year today, used to be effectively over 70%. And the effect of that was that owners of companies would pay their workers more and invest more in their companies, because they didn't want to give the money all to the government. So the whole propaganda is upside down. High taxes can have great economic benefit, but of course they don't want you to know that. Do I have that right?
Emmanuel Saez (36:13.486)
I think that's right. You know, it's hard to fathom it today, but indeed for decades, you know, from the forties to the sixties, it was above 70% and even reached, you know, the extraordinary 90% plus. It basically, US society was saying, look, you can't pay yourself a huge amount, because we're gonna confiscate it.
David Fenton (36:34.83)
That's how Eisenhower built the interstate highway system and invested in all the great public universities. And by the way, nobody paid ninety percent, as you know, but it was effectively quite high. And then Ronald Reagan came in in 1980 and cut it in half.
You know, now we have this situation where they want people to think that the country's broke. We ain't broke, folks. We're richer than ever. We just have a bunch of hoarders that need to give some back for the sake of the country and humanity.
They're saying that you really are out to make this permanent. So can you be honest with us about that? Do you favor that?
Emmanuel Saez (37:09.762)
I do. I've repeated it, I've said it several times, and let me repeat it, because it's very important. This ballot is very important because it can be a first demonstration, but to really attack the problem of wealth concentration, you need stronger and permanent wealth taxes.
We need to show that it can work here in California, and then hopefully, you know, if we get a progressive in the White House with a well-lined up Congress, we will be able to do something stronger at the federal level. But even at the state level, you know, like California, California is an engine, you know, creating lots of billionaires. There is a way to get some of that enormous wealth, you know, in the form of revenue, with a reasonable wealth tax. I do think that up to 1% per year will be fine. You know, Silicon Valley produces billionaires at such a rate, you know, that even if you have to pay your 1% wealth tax per year, the same we have to pay, you know, on our houses, every year, California remains, you know, the best place to be if you want to build, you know, a business that's gonna make you a billionaire.
David Fenton (38:23.32)
Yeah, plus if you move to Florida, you're gonna go underwater, folks, because of some other billionaires that are keeping us from doing anything about climate change. So, anything else that you wanna stress to us?
Emmanuel Saez (38:35.534)
So I hope, you know, the audience will be engaged, and I welcome them all, you know, to talk to their friends and their network and tell them, you know, yes, to get the good information, and in this one, don't necessarily believe the establishment. We need, you know, those fresh, new, bold ideas.
And I do believe, you know, I believe in US democracy. I want to be an optimist, and I do believe that the US is often a leader, California especially so. I think the stars have aligned, you know, in the sense that now people see the enormous harm that can come, you know, from very concentrated wealth. The products that billionaires produce, we are worried about them. We're no longer so convinced, you know, that it's the best possible thing for humanity. We need the revenue. In my view, you know, all those things align to give us suddenly, you know, a fighting chance to make history in November here in California.
David Fenton (39:39.918)
The good news is that the majority of the American public, including a lot of Republicans, support higher taxes on the wealthy. I mean, it's just obviously out of whack and out of balance. So where can people go to find out more about the initiative?
Emmanuel Saez (39:54.69)
We hope, you know, to ramp up our operations, in you know, so that the initiative will find you on social media wherever you are. But there is, you know, type California billionaire tax, you know, on Google precisely.
Emmanuel Saez (40:09.134 / 40:11.318)
You'll see the official campaign website. Myself, you know, I've produced a number of papers, but that's more technical academic webpage.
David Fenton (40:20.216)
We have this feature called Pass the Torch, where activists like you, 'cause you're now an activist, not just an economist, let us know about other people doing great work. Wanna nominate anyone?
Emmanuel Saez (40:30.828)
I do have an obvious name to give you, and that's Gabriel Zucman. I mentored him here at UC Berkeley, and he's become way more famous than I am, because he sponsored, you know, a wealth tax in France that became so famous that it was called the Zucman tax, with demonstrations in the streets saying, you know, we want the Zucman tax. So he's here this summer to help us boost, you know, this California wealth tax initiative, and he's also pushed for a global wealth tax, you know, international, with Brazil, the G twenty. So he's a fascinating person to have, even closer, you know, to the activist world than I am.
David Fenton (41:15.318)
Right. Okay. Well, that's a great suggestion. Thank you very much for being with us, Emmanuel.
Emmanuel Saez (41:19.342)
Thank you, David, for having me.
R.R. Robbins (41:23.906)
Thank you to our guest Emmanuel Saez for the conversation about his ballot initiative with the SEIU healthcare workers. Election Day is Tuesday, November 3rd. Make a plan to vote today. If you're a California resident who wants more information about voting, or wants to register to vote online, go to registertovote.ca.gov.
Buy David's book, The Activist's Media Handbook: Lessons from 50 Years as a Progressive Agitator, at bookshop.org or wherever you buy books. Got ideas for the show? Want to pitch a guest? Just want to follow the podcast? We're at AgitationNation.com. Also subscribe to David's Substack and all our socials at TheFentonForecast.com.
Agitation Nation is a show from the Fenton Forecast. Our theme song is BLACCK, used with the kind permission of Jon Batiste. Our end credits theme is Power to the People by John Lennon, courtesy of EMI Records and used with permission of the John Lennon Estate. Agitation Nation is hosted by David Fenton. It's produced and edited by R.R. Robbins. Additional producing by A.P. Hernandez. Thanks to Theo Fenton.
Thank you again for listening. We'll be back with another voice you need to hear next week. Until then, advocate, activate, agitate. The democracy you save may be your own.