I Asked ChatGPT What Would Happen If Billionaires Paid Taxes at the Same Rate as the Average California Resident
Written by
Laura Beck
Edited by
Molly Sullivan
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The debate over billionaire taxes always comes back to the same question: What if the ultra-wealthy paid taxes at the same rate as regular people? I asked ChatGPT to crunch the numbers on what would happen if U.S. billionaires paid taxes at the same effective rate as the average California resident.
ChatGPT broke down multiple scenarios and explaining why the answer depends heavily on how you define “tax rate” and what exactly gets taxed.
The Problem With Defining ‘Tax Rate’
ChatGPT started by pointing out that “paying the same rate” could mean several different things. The AI wrote that there are three main interpretations and each would produce different results.
The first option focused on effective federal income tax rates, where the average U.S. filer pays around 14% to 15% of their income in federal income taxes. This was the most conservative.
The second approach looked at total tax burden, including federal, state, payroll, local, property and sales taxes. ChatGPT cited research showing the typical household pays around 27% of their income in combined taxes.
The third and most wholistic interpretation treated it as a wealth tax, where billionaires would pay the same percentage of their total wealth annually that average people pay of their income.
Three Scenarios With Different Outcomes
ChatGPT organized its analysis into three concrete scenarios to show how much revenue each approach might generate.
Scenario 1: Matching Federal Income Tax Rates
If billionaires paid the same effective federal income tax rate as average Americans (around 14% to 15%), it would raise tens of billions annually. However, ChatGPT explained this approach has limitations because much of billionaire wealth growth comes from unrealized capital gains that aren’t taxed until sold.
The AI referenced ProPublica’s analysis showing many billionaires pay very low effective tax rates on their wealth increases, making this scenario potentially impactful but still somewhat limited.
Scenario 2: Matching Total Tax Burden
This approach would require billionaires to pay around 27% of their economic income in combined taxes, similar to typical households. ChatGPT estimated this could raise hundreds of billions annually and would substantially reduce income inequality.
The AI wrote that this would require major changes to how capital income gets taxed, including closing avoidance strategies and potentially introducing new tax mechanisms.
Scenario 3: Wealth Tax Approach
This “bigger picture” interpretation would impose an annual tax on billionaire wealth itself. ChatGPT calculated that a 2% annual tax on the estimated $6 trillion to $7 trillion in U.S. billionaire wealth could generate $120 billion to $140 billion per year.
This would directly address wealth concentration rather than just income inequality but faces the biggest legal and political obstacles.
What That Money Could Fund
ChatGPT broke down what different revenue levels could actually accomplish in practical terms.
Tens of billions annually could expand healthcare subsidies, fund education programs or modestly increase Social Security benefits.
Hundreds of billions per year could fund major priorities like universal pre-K, climate investments, student debt relief programs and deficit reduction.
The largest wealth tax scenarios have the potential to fundamentally change wealth inequality and at the same time fund multiple major initiatives that benefit the lives of all Americans.
The Reality of Implementation Challenges
ChatGPT didn’t just focus on the potential benefits, the AI also outlined some practical challenges that would limit the actual impact.
Behavioral responses topped the list of concerns. Billionaires would try to avoid paying more and potentially relocate, restructure assets or convert to different asset types. These responses could reduce the actual revenue collected unless enforcement mechanisms and rules adapted to match them.
Legal and political feasibility is another major hurdle. Implementing high effective rates across the billionaire class would require tax code changes, including mark-to-market rules, new wealth taxes, changes to stepped-up basis treatment and elimination of certain deductions.
The AI wrote about economists like Gabriel Zucman who have modeled wealth tax implementations, while also mentioning the political difficulty of making these changes.
ChatGPT’s Bottom Line
The AI concluded that billionaire tax increases would raise substantial revenue and reduce inequality, but the precise impact depends heavily on implementation details and enforcement mechanisms.
For quick revenue generation, ChatGPT suggested that taxing realized investment income and closing avoidance loopholes offers the most straightforward path. This approach raises a lot of money while avoiding the legal complexities of wealth taxes.
For reducing wealth concentration specifically, the AI wrote that wealth taxes or mark-to-market taxation of unrealized gains are much more powerful tools.
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