Warren Buffett’s secretary has paid a higher tax rate than Warren Buffett for years now, and somehow that’s still true in 2026. It’s not because the tax code has a soft spot for old men who like Cherry Coke — it’s because the way the ultra-rich actually get paid barely resembles a paycheck, and the tax code was never built to catch it.
Here’s the trick, and it has a name now: buy, borrow, die. Step one, buy assets that grow in value without ever being “sold,” so there’s no taxable event. Step two, borrow against those assets for cash to live on, because loans aren’t income and the IRS doesn’t touch them. Step three, die, and hand the whole appreciated pile to your heirs with a “stepped-up basis” that wipes out the capital gains tax that was ever going to be owed on it. ProPublica ran the numbers a few years back and found the 26 wealthiest Americans paid an average tax rate of 4.8% against how much richer they got. Not their income. Their actual wealth growth. Most of us don’t get that rate on a good year of overtime.
A senator finally wrote a bill aimed at the middle step instead of pretending the whole scheme doesn’t exist. Ruben Gallego introduced the ROBINHOOD Act in June, and Rep. Dan Goldman has a companion version in the House. The mechanism is almost boring, which is exactly why I like it: if you’re worth over a billion dollars, or you’re pulling in more than $100 million a year, and you borrow against your assets, that loan gets treated as a taxable event. No new bracket. No wealth tax. Just closing the door on the part of the loophole where “I never technically sold anything” turns into “I never technically pay anything.”
Compare that to what California’s trying instead. There’s a billionaire wealth tax on the ballot that would charge people a percentage of their net worth every year, and it’s already got Sergey Brin and a chunk of the state’s billionaire class publicly weighing the exits. I get why lawmakers reach for that lever, it sounds satisfying, but it’s also the exact outcome you’d predict: tax people on money they haven’t cashed out, and some of them just leave and take the jobs and the tax base with them. A brand-new rate invites a fight about fairness. Closing a loophole just enforces a law that already exists.
This is the part where I’m supposed to pick a team, and I’m not going to. I don’t think the rich need a new, higher rate slapped on them because the number feels good on a campaign flyer. I also don’t think “well, technically it’s legal” is a real defense when the entire strategy exists to make sure billions in gains never show up as income anywhere, ever. Those are two different arguments, and only one of them is actually about tax policy. The other one’s just about whether the wealthiest people in the country get to opt out of the same system everyone else lives under.
Nobody needs to invent a new way to tax billionaires. We already wrote one down. We just stopped bothering to collect it.
Two cents: close the loophole, not the gap between the tax code and reality.