I Asked ChatGPT What Would Happen If Billionaires Paid Taxes at the Same Rate as the Middle Class
Story by Laura Beck
Taxes can get you thinking about fairness. For instance, when I’m calculating deductions on my salary and watching a decent chunk go to Uncle Sam, I can’t help but wonder: What if the ultra-wealthy paid the same percentage of their income in taxes that regular people do?
Here’s how it works: Billionaires borrow money against their stock holdings (which isn’t taxed), live off those loans and then pass their assets to heirs largely tax-free when they die. Meanwhile, regular people like me can’t defer taxes on our paychecks or borrow against our retirement accounts without major penalties.
The AI used ProPublica data to illustrate this: “The top 25 billionaires saw their wealth grow by $401 billion from 2014-2018, but paid just $13.6 billion in federal income taxes — an effective rate of 3.4% on wealth growth.”
That 3.4% figure is what really stung. While they’re paying their legal tax obligations on realized income, their actual wealth is growing at a rate that’s taxed far below what middle-class workers pay on their salaries.
What If We Changed the Rules?
ChatGPT ran the numbers on what would happen if billionaires paid taxes at the same rate middle-class families do — around 15%-22%.
Using the ProPublica data, if those top 25 billionaires had been taxed at a 20% rate on their wealth growth, they would have paid around $80 billion instead of $13.6 billion.
“Extrapolate that across approximately 1,000 billionaires?” the AI asked. “You’re talking hundreds of billions in added revenue annually.”
Where That Money Could Go
The AI outlined several ways this massive revenue increase could transform government services:
Healthcare: We could expand Medicare and Medicaid, potentially moving toward universal coverage.
Education: Fund universal pre-K or make community college free for everyone.
Infrastructure and climate: Invest seriously in clean energy projects and fix our crumbling roads and bridges.
Debt reduction: Actually pay down the national debt instead of adding to it every year.
ChatGPT noted that this extra revenue could “stabilize the economy by boosting the spending power of everyday Americans.” Basically, reducing inequality in a way that helps everyone, not just those at the bottom.
What Surprised Me Most
The most eye-opening part was learning that the problem isn’t necessarily that billionaires are breaking the law or even paying lower rates on their taxable income. The issue is that our entire tax system is designed around taxing work rather than wealth.
“Middle-class families can’t defer taxes on wages or borrow against stocks tax-free,” ChatGPT pointed out. This creates a fundamental unfairness where people who work for their money get taxed immediately, while people whose money grows through investments can delay or even avoid those taxes entirely.
What We Need To Think About
After diving into ChatGPT’s analysis, I realized the conversation about billionaire taxes is more complicated than simple rate comparisons. Under current law, wealthy Americans do pay their required taxes. But the system allows their wealth to grow in ways that are largely untaxed, while regular workers pay taxes on every dollar they earn.
The AI concluded that if we could successfully tax billionaires more like middle-class workers, the results would mean hundreds of billions in additional revenue annually and potentially better funding for health, education and climate programs. What’s more, it could have the power to reduce inequality and improve public trust in the tax system.
Maybe the real question isn’t whether billionaires should pay more taxes, but whether our entire approach to taxing work versus wealth makes sense in an economy where most billionaires’ fortunes come from asset appreciation rather than traditional income.
As ChatGPT put it: “The U.S. could significantly reshape its fiscal and social landscape” — if we can figure out how to make it work in practice.
Here’s how the government spent $6.8T last year (From “USA Facts” article) The federal government spent $6.8 trillion in fiscal year 2024. We’ll say that again. $6,800,000,000,000. We’re not saying that’s good or bad, too much or too little. But we can agree that that scale is hard to fathom, right? Our new agency spending chart makes 2024 spending for the executive, legislative, and judicial branches easier to understand. We even tracked the president’s budget, independent agencies such as NASA, and entities that get federal money but don’t slot neatly into other categories (think the Smithsonian). A few insights: The Department of Health and Human Services spent $1.7 trillion in 2024. That was about 25.4% of federal expenditures, primarily driven by the $1.5 trillion in spending by the Centers for Medicare & Medicaid Services. The Social Security Administration accounted for the biggest share of independent agency spending: $1.5 trillion. Federal Student Aid accounted for 2.4% of federal spending, totaling $161.0 billion. The National Parks Service spent just under $4.5 billion, for 0.07% of federal spending. Congress runs the botanic garden adjacent to the Capitol Building. The garden accounted for $19.0 million in legislative branch spending.
While lengthy this article does a great job of explaining the differences
In both a republic and a democracy, citizens are empowered to participate in a representational political system. They elect people to represent and protect their interests in how the government functions.
Key Takeaways
Republics and democracies both provide a political system in which citizens are represented by elected officials who are sworn to protect their interests.
In a pure democracy, laws are made directly by the voting majority, leaving the rights of the minority largely unprotected.
In a republic, laws are made by representatives chosen by the people and must comply with a constitution that protects the rights of the minority from the will of the majority.
The United States, while basically a republic, is best described as a “representative democracy.”
In a republic, an official set of fundamental laws, like the U.S. Constitution and Bill of Rights, prohibits the government from limiting or taking away certain inalienable rights of the people—even if that government was freely chosen by a majority of the people. In a pure democracy, the voting majority has almost limitless power over the minority.
The main difference between a democracy and a republic is the extent to which the people control the process of making laws under each form of government.
Pure Democracy
Republic
Power Held by
The population as a whole
Individual citizens
Making Laws
A voting majority has almost unlimited power to make laws. Minorities have few protections from the will of the majority.
The people elect representatives to make laws according to the constraints of a constitution.
Ruled by
The majority
Laws made by elected representatives of the people
Protection of Rights
Rights can be overridden by the will of the majority.
A constitution protects the rights of all people from the will of the majority.
Early Examples
Athenian democracy in Greece (500 BCE)
The Roman Republic (509 BCE)
Is the U.S. a Democracy or a Republic?
The United States, like most modern nations, is neither a pure republic nor a pure democracy. Instead, it is a hybrid democratic republic. However, when the delegates of the United States Constitutional Convention debated the question in 1787, the exact meanings of the terms republic and democracy remained unsettled. At the time, there was no term for a representative form of government created “by the people” rather than by a king. In addition, American colonists used the terms democracy and republic more or less interchangeably, as remains common today.
In Britain, the absolute monarchy was giving way to a full-fledged parliamentary government. Had the Constitutional Convention been held two generations later, the framers of the U.S. Constitution, having been able to read the new constitution of Britain, might have decided that the British system with an expanded electoral system might allow America to meet its full potential for democracy.
Nevertheless, Founding Father James Madison may have best described the difference between a democracy and a republic:
“It [the difference] is that in a democracy, the people meet and exercise the government in person: in a republic, they assemble and administer it by their representatives and agents. A democracy, consequently, must be confined to a small spot. A republic may be extended over a large region.”
The fact that the Founding Fathers intended for the United States to function as a representative democracy, rather than a pure democracy, is illustrated in a letter from Alexander Hamilton to Gouverneur Morris dated May 19, 1777.1
“But a representative democracy, where the right of election is well secured and regulated & the exercise of the legislative, executive and judiciary authorities, is vested in select persons, chosen really and not nominally by the people, will in my opinion be most likely to be happy, regular and durable.”
The Concept of a Democracy
Coming from the Greek words for “people” (dēmos) and “rule” (karatos), democracy means “rule by the people.” As such, a democracy requires that the people be allowed to take part in the government and its political processes. U.S. President Abraham Lincoln may have offered the best definition of democracy as being “a government of the people, by the people, for the people” in his Gettysburg Address on November 19, 1863.
Typically through a constitution, democracies limit the powers of their top rulers, such as the President of the United States, set up a system of separation of powers and responsibilities between branches of the government, and protect the natural rights and civil liberties of the people.
In a pure democracy, all citizens who are eligible to vote take an equal part in the process of making laws that govern them. In a pure or direct democracy, the citizens as a whole have the power to make all laws directly at the ballot box. Today, some U.S. states empower their citizens to make state laws through a form of direct democracy known as the ballot initiative. Put simply, in a pure democracy, the majority truly does rule, and the minority has little or no power.
Representative Democracy
In a representative democracy, also called an indirect democracy, all eligible citizens are free and encouraged to elect officials to pass laws and formulate public policy representing the needs and viewpoints of the people. Today, representative democracies are very commonly utilized, by nations including the United States, the United Kingdom, and France.
Participatory Democracy
In a participatory democracy, eligible citizens vote directly on policy while their elected representatives are responsible for implementing those policies. In this manner, the people determine the social and economic direction of the state and the operation of its political systems. While representative and participatory democracies share similar ideals and processes, participatory democracies tend to encourage a higher level of citizen participation than traditional representative democracies.
While there are currently no countries specifically classified as participatory democracies, most representative democracies employ citizen participation as a tool for social and political reform. In the United States, for example, so-called “grassroots” citizen participation causes such as the women’s suffrage campaign have led elected officials to enact laws implementing sweeping social, legal, and political policy changes.
The concept of democracy can be traced back to around 500 BCE in Athens, Greece. Athenian democracy was a true direct democracy, or “mobocracy,” under which the public voted on every law, with the majority having almost total control over rights and freedoms.
The Concept of a Republic
Derived from the Latin phrase res publica, meaning “the public thing,” a republic is a form of government in which the social and political affairs of the country are considered a “public matter,” with representatives of the citizen body holding the power to rule. Because citizens govern the state through their representatives, republics may be differentiated from direct democracies. However, most modern representative democracies are republics. The term republiccan also be attached to not only democratic countries but also to oligarchies, aristocracies, and monarchies in which the head of state is not determined by heredity.
In a republic, the people elect representatives to make the laws and an executive to enforce those laws. While the majority still rules in the selection of representatives, an official charter lists and protects certain inalienable rights, thus protecting the minority from the arbitrary political whims of the majority.
In this sense, republics like the United States function as representative democracies. In the U.S., senators and representatives are the elected lawmakers, the president is the elected executive, and the Constitution is the official charter.
Perhaps as a natural outgrowth of Athenian democracy, the first documented representative democracy appeared around 509 BCE in the form of the Roman Republic. While the Roman Republic’s constitution was mostly unwritten and enforced by custom, it outlined a system of checks and balances between the different branches of government. This concept of separate governmental powers remains a feature of almost all modern republics.
Republics and Constitutions
As a republic’s most unique feature, a constitution enables it to protect the minority from the majority by interpreting and, if necessary, overturning laws made by the elected representatives of the people. In the United States, the Constitution assigns this function to the U.S. Supreme Court and the lower federal courts.
For example, in the 1954 case of Brown v. Board of Education, the Supreme Court declared all state laws establishing separate racially segregated public schools for Black and white students to be unconstitutional. In its 1967 Loving v. Virginia ruling, the Supreme Court overturned all remaining state laws banning interracial marriages and relationships.
More recently, in the controversial Citizens United v. Federal Election Commission case, the Supreme Court ruled 5-4 that federal election laws prohibiting corporations from contributing to political campaigns violated the corporations’ constitutional rights of free speech under the First Amendment. Further, the constitutionally granted power of the judicial branch to overturn laws made by the legislative branch illustrates the unique ability of a republic’s rule of law to protect the minority from a pure democracy’s rule of the masses.
