Stop Chasing Billionaires. Tax the Machine.
Use a levy on corporate equity and a passive venture portfolio to build an American Commons Fund.
In yesterday’s post, I discussed the problems that have killed annual wealth taxes in many rich countries that have tried them: complex valuations, liquidity issues for private company founders, and capital flight.1 I outlined the practices of nations like Japan that successfully impose substantial taxes on inherited wealth and argued that California’s billionaire tax initiative ignores these lessons while committing rookie legal and financial errors. The state ballot initiative cannot address the massive “buy, borrow, die” loophole that allows the ultra-wealthy to live off untaxed borrowing until death erases their capital gains entirely.
I suggested closing this loophole and folding all gifts and trusts into inheritance tax calculations. Even leaving the current $15 million individual exemption in place, this would generate $200–$300 billion annually. This is real money. It would cut 12–16% of our annual deficit or fund Universal Pre-K and completely close the Social Security funding gap.
But inheritance taxes are not the only way to tax wealth. This post proposes a structural pivot. Instead of just chasing individuals—who can hire lawyers, create trusts, and move to Austin—we would also tax the engines of wealth themselves and put some of this money to work alongside our most skilled investors.
The Corporate Equity Levy
Every company with a market capitalization above $1 billion would owe an annual levy equal to 0.5% of its equity value, payable by issuing non-voting shares to the American Commons Fund.
This is straightforward. A company worth $100 billion would issue $500 million in new shares each year to a newly-created sovereign wealth fund, here referred to as the American Commons Fund (ACF). No cash would change hands. The company remains whole. The founder still drives, but the public gets a seat in the back of the limo.
— Benefits
This approach avoids the trifecta of complex valuations, liquidity challenges, and capital flight that plague most wealth taxes.
Easy valuation. The “army of appraisers” problem vanishes. Public companies have ticker symbols and real-time prices. Private unicorns are already valued during funding rounds and for Section 409A compliance.2 We are not guessing the value of a Picasso; we are reading a Bloomberg terminal.
No liquidity crisis. This is the gentle tax. When California’s poorly designed initiative threatened to force DoorDash co-founder Tony Xu to sell an estimated 173% of his net worth just to cover a tax bill, it highlighted a fatal design flaw: you cannot eat paper gains. Under this model, the market absorbs the cost through dilution. The company stays intact. The founder stays put.
No capital flight. You can move your home to Texas, but you cannot easily move a multibillion-dollar stock listing to the Cayman Islands. The tax attaches to the listing, not to the person. While companies could theoretically redomicile, the cost of losing access to the world’s deepest and most liquid capital markets is a price few boards would be willing to pay.
— Costs
There is no such thing as a free tax. This one imposes three financial costs:
The dilution drag. Issuing 0.5% of equity annually is a permanent tax on the future. Over a decade, it compounds to roughly 4.9% dilution. Over twenty years, about 9.5%. How bad is that? Silicon Valley companies routinely dilute shareholders by 2–5% per year just to compensate their engineers. But voluntary dilution for talent is a choice; statutory dilution is a financial drag. All taxes are.
The announcement hit. Markets are forward-looking. The moment this becomes law, investors price in the perpetual dilution stream. If you discount a 0.5% annual dilution at a 5% real required return, share prices drop by roughly 9–10% overnight. Call it a one-time cardiac event for the S&P 500—painful, but over quickly. The market adjusts. It always does.
The threshold distortion. A cliff at $1 billion creates an incentive for companies to stay private longer or engage in financial engineering to hover just below $ 1 billion. The fix is straightforward: apply the tax only to the marginal value above $1 billion, creating a smooth phase-in rather than a punitive notch.
The Venture Option
The American Commons Fund would have the option to purchase up to 10% of any privately issued stock in a company raising $50 million or more, under the same terms as the lead investor.
ACF shares would be non-voting with negotiated information rights. If the company does not go public within ten years, it would have a right to repurchase the fund’s shares from ACF at fair market value.
— Benefits
One of the most significant sources of wealth concentration in recent decades is that private investors capture the highest returns before companies go public. In the 1990s, Microsoft and Amazon went public relatively early, allowing ordinary investors to participate in the upside. Today, companies stay private far longer. Stripe and SpaceX are worth tens of billions, and no public investor can participate. The venture option gives the public a way in.
The American Commons Fund would need to be selective. There are thousands of private financings each year; blindly exercising the option on all of them would produce mediocre returns. In practice, the fund would exercise the option on rounds led by top-tier investors or in sectors aligned with national strategic priorities.
Once you have established a sovereign wealth fund, this approach has some strengths.
It solves adverse selection. The classic problem with government investment in private companies is that the government funds Solyndra, not SpaceX. But this mechanism sidesteps this problem. The ACF does not choose companies; it drafts behind investors who do. If Sequoia has done the diligence, negotiated the terms, and committed its own capital, the ACF is free-riding on some of the most sophisticated investment judgment in the world. The logic is the same one that makes index funds work: you do not need to be smart if you can attach yourself to investors who are.
The terms are pre-negotiated. The American Commons Fund does not need a deal team, does not haggle over valuation, and does not negotiate protective provisions. It takes what the lead investor gets. This keeps operating costs extraordinarily low—you need analysts to decide which options to exercise, lawyers to process the paperwork, and a back office, but not the full infrastructure of a venture fund.
It democratizes access to private-market returns. The ACF captures pre-IPO appreciation on behalf of the public. In practice, it operates as a silent limited partner riding alongside whoever priced the deal. If the fund’s returns flow back to households through dividends, Social Security support, or tax relief, this is a direct mechanism for sharing wealth creation that currently accrues almost exclusively to accredited investors and institutions large enough to access top-tier venture capital.
It is non-distortionary. The company gets the same amount of capital it would have raised anyway. Operations, governance, and strategy are unaffected because the shares do not vote. The lead investor’s incentives are unchanged. The pricing is unchanged. The ACF skims a thin layer of return off the top of private markets without altering how those markets function. And the ten-year buyback provision prevents the fund from becoming a permanent, unwanted guest on the cap tables of companies that choose to remain private indefinitely.
It creates a natural pipeline into the public company levy. The two programs are architecturally complementary. Companies that succeed and eventually cross the $1 billion market cap threshold transition from the voluntary co-investment regime to the compulsory equity levy. The ACF’s early private-market stake converts into a public-market holding, subject to the dilution of the .5% levy outlined above.
— Costs
Venture and private equity investors are unlikely to give this idea a standing ovation, as it amounts to a tax on their capital.
Syndicate resistance. Venture rounds involve tight syndicates where relationships, reputation, and follow-on commitment matter. A lead investor allocates shares to co-investors partly based on the value those co-investors bring—introductions, expertise, future capital. Aside from committing to future rounds and introductions to federal buyers, the American Commons Fund is a dead weight on the cap table. If the ACF’s 10% displaces a strategic co-investor who would have provided real operational value, the company is worse off. Founders and lead investors would resent this, and you would sometimes see creative structuring to minimize ACF participation—side letters, unusual share classes, restructured rounds, and a surprising number of financings for $49.9 million. VCs are very good at this.
The information-rights tension. At best, the American Commons Fund would negotiate the same information rights as other preferred shareholders—board observer seats, quarterly financials, cap table access, and material event notifications. This means the federal government, through the ACF, could have detailed financial visibility into thousands of private companies, including those in defense, sensitive technology, or politically charged sectors. Even with strict information barriers, the perception that the government has a window into a company’s private books could chill certain kinds of entrepreneurship. Foreign-founded companies raising money from U.S. investors would be particularly wary.
Blind spots. Venture returns follow a brutal power law. The top 10–20% of deals generate virtually all of the returns; the rest return little or nothing. The ACF will need to exercise judgment about which rounds to join — and this partially recreates the deal selection problem it was designed to avoid. Moreover, venture deals contain subtle traps: bridge rounds disguised as growth rounds, leads investing defensively to protect existing positions, and side provisions that make headline valuations misleading. Sophisticated venture investors navigate these with deep relationship networks. A government fund would operate with less context.
Political capture is the greatest risk to any sovereign wealth fund, regardless of its funding source. Once the ACF holds meaningful stakes in thousands of companies, political pressure to use that position for non-financial objectives will become intense.
It is easy to imagine a senator proposing legislation to give the American Commons Fund voting rights on climate resolutions. Or that pressures the ACF to divest from firearms manufacturers, fossil fuel companies, or firms operating in disfavored countries. Or that require companies to sign labor agreements. Norway’s massive sovereign wealth fund, the world’s largest private investor, faces exactly these pressures. In early 2026, the U.S. State Department publicly criticized the fund for divesting from Caterpillar on ethical grounds related to the war in Gaza.3 The non-voting provision helps. But political gravity is relentless.
Insulating the American Commons Fund from political pressure will be an important part of its design, just as it was for the Federal Reserve Board. Among other provisions, the legislation should give companies and investors a statutory right to sue ACF for damages if it violates the terms under which it provides public capital.
The American Commons Fund: A National 401(k)?
The total market capitalization of U.S. public companies is roughly $69 trillion. A 0.5% levy would seed the ACF with approximately $345 billion in equity value in its first year alone.
At this scale, the non-voting structure is essential. Norway’s Government Pension Fund Global holds roughly 1.5% of all listed companies worldwide—and it votes its shares. That gives a single fund from a tiny country real influence over the governance of global corporations. To avoid the specter of “creeping socialism,” the American fund must be strictly non-voting. Neither Joe Biden nor Donald Trump should decide who sits on Apple’s board.
So what do you do with a fund that could eventually own 10% of corporate America? It might do any of several things (importantly, it cannot do them all).
Improve fiscal sustainability. The ACF can use dividends and share sales to reduce the $34 trillion national debt without raising household taxes. The fund’s revenue stream would be less cyclical than corporate income tax revenue because market caps fall less in recessions than profits do. This provides a stabilizing buffer during economic contractions.
Invest in critical sectors. Following the CHIPS Act model, the American Commons Fund can take stakes in critical infrastructure, rare earth processing, or domestic semiconductor manufacturing—channeling investment where strategic interests demand it.
Provide citizens with a social royalty. The Alaska Permanent Fund has distributed between $1,000 and $2,000 annually to every Alaskan resident since 1982, funded by oil revenues that Alaskans decided belonged to the public.4 A seven-trillion-dollar ACF paying out 5% of its capital per year would send roughly $1,100 to every man, woman, and child in the United States. For a family of four, that is $4,400—not life-changing, but real money, and a tangible stake in the nation’s productive capacity.
Critics will call the state’s demand for a permanent equity stake in private success “nationalization by a thousand cuts.”
The response writes itself: “your success was built on a public ecosystem of laws, courts, and decades of investment in science, education, and defense. Paying forward your share so that others can succeed is not expropriation. It’s rent.”
I have serious practical concerns about the workability of wealth taxes. This has not prevented me from outlining three such taxes in two days.
An estate tax that includes all gifts and trusts and removes any revaluing of assets at death. I would advocate a high exemption, perhaps the current $15 million, and a progressive tax on the balance ranging from 50-75%.
A levy on the equity of large companies, payable annually in nonvoting shares held by the American Commons Fund.
A portfolio of private nonvoting shares held by venture and private equity-backed companies. These shares are purchased at prices established by lead investors, not levied, but the right to the purchase will be viewed as a tax by the investors who need to make room for passive public financing.
Compare this to our current system: a messy, loophole-ridden income tax that largely leaves the more than $100 trillion in U.S. household wealth sitting beyond its reach.
We need to debate whether 0.5% is the right rate for a more stable union and how to structure an American sovereign wealth fund that can resist political capture. This would be vastly more productive than a spiteful ballot proposition that targets 200 wealthy Californians and hopes they don’t move to Texas.
ICYMI
The Trump administration will take a $10 billion fee for brokering the TikTok deal. TikTok is pivoting hard to become an AI company.
The creators of 1960s sensations Barbie and Hot Wheels were husband and wife.
“How We Hacked McKinsey’s AI Platform”. Unbelievable.
Tesla is now shipping its Cybercab, a self-driving car with no steering wheel.
Scientists send information invisibly, using “negative light”.
China is crushing U.S. battery companies.
Russia is recruiting Africans to fight its war in Ukraine.
Some readers question whether valuing large estates is actually difficult. The experience of European countries that have attempted annual wealth taxes is that a great deal of private wealth among the ultra-wealthy is concentrated in closely held businesses, private equity, and unique physical assets such as art, real estate, and jewelry. These private assets not only require expensive, subjective annual appraisals but also give wealthy people a strong incentive to complicate things, which they often do. California is proposing a one-time tax, and policy wonks have proposed workarounds. Still, the best solution, in my view, is to close the various loopholes (gifts, trusts, and especially stepped-up basis) and tax estates heavily once, at death.
Section 409A of the Internal Revenue Code requires private companies to obtain independent valuations of their common stock for equity compensation purposes. See 26 U.S.C. § 409A.
Norway’s Government Pension Fund Global held over $2.1 trillion in assets as of late 2025, owns approximately 1.5% of all globally listed companies, and returned 15.1% in 2025. See NBIM. In early 2026, the fund faced U.S. government criticism for divesting from Caterpillar on ethical grounds—a preview of the political pressures any large sovereign fund will face.
The Alaska Permanent Fund, established by constitutional amendment in 1976, held approximately $83 billion in assets as of 2025. The 2025 dividend was $1,000 per resident; the 2024 dividend was $1,702, including an energy relief supplement.