What Does a Billionaire Owe the State?

This weekend, something unusually useful happened on X, formerly Twitter.

Mark Cuban and Rep. Ro Khanna began arguing directly over California’s Proposition 40 — a ballot measure that would impose a one-time 5 percent tax on the net worth of billionaires who were California residents on January 1, 2026.

Whatever one thinks of the proposal, the exchange itself was valuable.

An elected official advocating a new tax was debating, publicly and in real time, someone belonging to the class of people the government intends to tax.

And very quickly, the conversation exposed why this is no longer simply a debate about whether billionaires should pay more.

They should pay taxes.

In fact, at this level of wealth, the argument for meaningful contribution to the system becomes difficult to dismiss.

Some individual fortunes are now comparable to the annual economic output of entire countries. And those fortunes are rarely created in isolation from the state around them.

Modern companies depend on publicly financed roads, ports, airports, courts, universities, research, communications infrastructure and educated workforces. Some of the largest technology and industrial companies have benefited more directly through government contracts, tax incentives, subsidies, public research, procurement or other forms of state support.

That does not mean government created the company or deserves its wealth.

It does mean the familiar image of the billionaire as someone who simply generated an enormous private fortune independently of the public system is incomplete.

And the American tax system creates another complication.

A founder can own billions of dollars in appreciating shares without selling them and therefore without immediately realizing the capital gain. Those assets can then be used as collateral for loans, providing liquidity without the borrowing itself ordinarily being treated as taxable income.

The loans are real obligations and must ultimately be repaid. But the structure can allow an extraordinarily wealthy person to finance consumption while continuing to defer taxation on enormous unrealized gains.

Imagine how strange the principle would sound if applied to an ordinary small-business owner: build wealth using an economic and legal system supported by everyone, extract substantial personal economic benefit from that wealth, but structure affairs so that comparatively little of the underlying appreciation ever appears as ordinary taxable income.

That is a legitimate problem for government to address.

But identifying the problem is much easier than designing the solution.

Because a billionaire’s net worth is not necessarily a billion-dollar pile of cash.

It is a valuation of assets.

Sometimes those assets are publicly traded shares with a visible market price.

Sometimes they are stakes in private companies whose headline value comes from the latest financing round or an estimate of what investors might pay.

A founder can therefore become $5 billion richer on paper without receiving $5 billion.

And that valuation may ultimately prove spectacularly accurate — or spectacularly wrong.

This is where California’s proposal becomes useful.

If government waits until assets are sold, enormous fortunes can appreciate for years while owners defer realization and borrow against them.

But if government taxes the estimated value of those assets before they are sold, it immediately encounters another set of questions:

How should the assets be valued?

Where does the owner find the cash?

Does taxation force the sale of ownership?

What happens if the valuation subsequently collapses?

And at the scale we are now discussing, taxation is only the beginning.

Some billionaire-controlled companies have become economically important enough that their success or failure can materially affect regions, industries and even national economies.

Technology makes the problem considerably more serious.

A company may control satellites, communications systems, artificial intelligence, cloud infrastructure, advanced manufacturing, autonomous vehicles, batteries, semiconductors or enormous quantities of data.

Those are not merely valuable businesses.

Increasingly, they are also strategic assets.

So the state faces a much harder set of questions than simply determining the appropriate tax rate.

If government succeeds in taxing an economically critical founder more heavily, how much does it still depend on that founder and the companies they control?

How should private wealth be taxed without unnecessarily weakening companies the country considers strategically important?

How much dependence on any single private actor is healthy in the first place?

And what happens when that actor’s companies are simultaneously dependent on a foreign power?

Tesla provides an unusually useful case study.

It is an American company whose enormous valuation contributes to Elon Musk’s personal wealth. But Tesla is also deeply integrated into China through manufacturing, suppliers and market access.

China does not need to own Tesla in order to possess potential leverage over it.

Control of components, production conditions, regulatory approvals, data rules and market access can create influence without a government ever appearing on the shareholder register.

And Musk simultaneously controls SpaceX — a company whose launch, satellite and communications capabilities have direct implications for American national security.

None of that means foreign economic exposure automatically becomes foreign political control.

It does mean that tax policy, industrial policy and national security can no longer be discussed as entirely separate subjects.

That is what this article is about.

It is not an argument against billionaires contributing more to the societies in which their fortunes are built. Nor is it a defense of billionaires.

The question is what mechanism actually works once we account for everything the state wants from concentrated private wealth: revenue, economic growth, private investment, strategic capability and protection from excessive domestic or foreign dependence.

What does a billionaire owe the state — and what happens when the state begins to depend on the billionaire too?

For ONEST+ members: how the U.S., UK, Europe, Monaco and Asia answer that question differently — and why Tesla offers one of the clearest examples of where taxation, economic power and national security collide.