Erin Caddell of GK Strategy’s American partner Anchor Advisors unpacks the prospect of wealth taxes on ultra-high net worth individuals and universal basic income to address heightened scrutiny of wealth inequality in the US
Stunning rise in tech wealth reignites policy debate about U.S. income inequality
The dramatic increase in market capitalization among US-based AI and other tech-related companies in recent years, encapsulated by last week’s whopper IPO for SpaceX, is reinvigorating a long-running debate about income inequality in America. Proposals for redistributive policies, such as wealth taxes and universal basic income (UBI), are gaining a new currency in US state capitals and in Washington DC.
The wealth creation of the AI boom is staggering. The SpaceX IPO made founder Elon Musk the world’s first trillionaire. Following Musk, the next nine richest Americans have a collective net worth of $1.7 trillion according to Forbes. All but one of whom (Warren Buffett) is a tech co-founder. Americans for Tax Fairness, a tax advocacy group, estimated that the net worth of America’s roughly 1,000 billionaires has increased by $1.5 trillion in 2025 to $8.2 trillion. Much of the rise is being driven by AI’s boost to tech content and infrastructure providers (as well as the tax cuts approved by President Trump and the GOP-controlled Congress last year).
The achievements of the ultra-rich in harnessing the promise of the latest technology revolution have drawn the ire of everyday Americans grappling with high inflation, increased healthcare costs and the threat of jobs being displaced by AI. This shift in public sentiment is turning on its head an old adage that Americans do not support higher taxes on the wealthy because many believe they, too, will become rich one day in the land of opportunity. A YouGov poll released in January found that 59% of Americans surveyed agreed that the government should pursue policies that narrow the gap between the rich and poor, with a majority of those Republicans surveyed agreeing that the wealth gap is a big problem. Compare this to 1939, when a Fortune magazine poll found only 35% of Americans surveyed felt wealth should be redistributed through higher taxes on the rich.
Policymakers looking for support to address income inequality can point to evidence that the gap between rich and poor is even wider now than in the Gilded Age of the late 19th century when the technologies of the Industrial Revolution created the first cohort of the ultra-wealthy in America; and ultimately a backlash that led to the antitrust actions around the turn of the century, and later to establishment of the federal income tax in 1916.
Gabriel Zucman, a leading international scholar of wealth inequality, published a book in May with the wonderfully direct title ‘We Need to Tax Billionaires’. It found that the wealth of the top 0.0001% of the world’s richest families represented more than 16% of world GDP in 2025, up from 4% in 1910, and 3% in the mid-1980s.
The early skirmishes on the income-inequality debate are playing out in the American states, where public sentiment can be codified into policy more quickly than at the federal level. Earlier this year, the legislation in Washington state (home of Microsoft and Amazon) was passed and its governor signed a new 9.9% state tax on annual incomes above US$1 million. Massachusetts has levied a 4% surcharge on $1 million-plus earners since 2022. Colorado, Connecticut, Hawaii, Michigan, New York and Rhode Island are considering similar measures.
California, the epicenter of both the AI revolution and worries about thousands of jobs being made obsolete by it, recently submitted enough signatures to place a ‘billionaires’ tax’ on the November 2026 ballot. The measure would impose a one-time 5% tax on California residents with net worth of greater than $1bn, a move projected to raise US$100 billion to fund healthcare, education and food assistance. The initiative has already roiled the state and potentially national politics. California Governor, and likely 2028 Democratic presidential candidate Gavin Newsom, has opposed the measure, arguing it would hurt the state’s tech industry. Labor unions that initiated the proposal are considering a compromise to lower the proposed tax to 2%.
Universal basic income (UBI) is the flip side of the wealth tax. Dating back centuries, UBI intends to provide a modest but unconditional income to all citizens of a society to recognize the dignity and value of each person and to share the benefits of a nation’s bounty. The idea has gained new currency amidst renewed concern in recent years about displacement of workers by technology. Twitter founder Jack Dorsey gave $15 million to a group called the Mayors for a Guaranteed Income to divide into a series of UBI pilot programs. UBI pilots have been launched in recent years in cities including Stockton, California; Durham, North Carolina; and Baltimore, Maryland.
With Trump and the GOP focused on lowering taxes rather than raising them, wealth levies and UBI programs are non-starters at the federal level now. This could change. Democrats are making income inequality a key plank in their campaign for the November midterm elections. Should Democrats win back the White House and gain control of both houses of Congress in 2028 (as Biden and his party did in 2020), they would likely consider wealth-tax proposals already circulating among party leaders. The ‘Billionaires’ Income Tax’ bill proposed in September 2025, for instance, would subject individual taxpayers with assets of greater than US$1 billion or annual income of more than $100 million a year for three consecutive years to an annual tax based on the net gain of their assets (or to deduct the losses). The bill was proposed in the Senate by Finance Committee Ranking Member Ron Wyden (D-OR), a leading voice in Democratic tax policy, and co-sponsored by 20 Democratic Senators.
While UBI has less support at the federal level than wealth taxes, UBI could also gain favor in a Democrat-controlled White House, Senate and House. In October 2025, a dozen Democratic House members led by Rep. Bonnie Watson Coleman (D-NJ) introduced the Guaranteed Income Pilot Program Act, which would provide income equivalent to rent for a two-bedroom apartment for an initial test group of 20,000 Americans. Even Musk himself has become a proponent of UBI, posting on X in April that ‘Universal HIGH INCOME via checks issued by the Federal government is the best way to deal with unemployment caused by AI’.
Individual federal income-tax rates have declined in the US from 91% in 1955 (a vestige of increases to help pay for World War II) to 37% in 2025, while capital-gains taxes have held around 25% over the past decade, according to the Peterson Foundation (see below). Not coincidentally, the entrepreneur has risen in the eyes of the American public during this period, as the ’Organization Man’ archetype of the loyal cog in the paternalistic corporation gave way to the us-against-the-world mindset of the U.S. tech industry, best symbolized by the foundings of Apple and Microsoft in the mid-1970s.
Through the commercialization of the internet in the mid-1990s, to the rise of social media 20 years later, to the acceleration of generative AI with the launch of ChatGPT in 2022, technology has become ever-more central to the U.S. economy and society. Yet the widening gap between the few at the top and the rest below seems to have driven a policy tipping point. With the federal deficit at 6% of GDP, the highest in U.S. history outside of war and the covid-19 pandemic, and individual tax receipts the largest source of federal revenue at 50%, it seems a question of when, not if U.S. policymakers will have to consider raising taxes. The ultra-wealthy are an easy target as part of such an effort. At the same time, pressure to distribute more of the benefits of the tech boom to the rank-and-file who bear its brunt also seems poised to continue to rise through increased support for UBI, as well as for higher standard deductions for federal income taxes, as multiple progressive policymakers have proposed recently.
What does this mean for US-focused investors and corporates?
We do not profess to be able to predict when or by how much tax rates on wealthy Americans will rise. But we do see several downstream effects impacting US-centric companies and their owners from the increased focus on income inequality.
First, a redistributive shift in the tax system would be positive for firms that help individuals and small businesses prepare their income taxes (yes, including those who assist wealthy people in looking for ways to pay less in tax), as well as the many companies that provide services to the tax-preparation industry itself.
Second, companies and investors should be more prepared to view their actions in the U.S. through a more populist lens and to delineate the benefits of their products and services beyond the limited traditional corporate stakeholders of shareholders, customers and employees. Take data centers. In recent years, the tech firms developing the data centers powering the AI boom, led by the multi-billionaires highlighted above, believed the substantial tax revenue they planned to bring to mostly rural or suburban communities where data centers are located would be enough to win support from local citizens. With many local governments across the political spectrum working to halt data-center construction due to concerns about resource utilization and quality of life, developers must take a more holistic approach, thinking through ways to offset the centers’ electricity and water usage; expanding efforts to reduce noise and other potential environmental impacts; and partnering with impacted communities to share in the benefits of the center’s economic activity beyond just paying a tax bill.
Third, should UBI proposals gain further support at the state or federal level, it would help providers of affordable housing, an industry already under the spotlight at the federal and state level as many regions of the U.S. deal with housing affordability issues and shortages.
Whatever the outcome of these and similar debates, income inequality and policies to address it are sure to occupy a larger place in the U.S. policy landscape in years to come.