The debate over billionaire taxation centers on fairness: Should ultra-wealthy Americans pay taxes at similar rates to middle-class workers? I asked ChatGPT to calculate what would happen if U.S. billionaires paid taxes at the same effective rate as the average Texas resident.
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ChatGPT’s answer revealed massive revenue potential — and some possible complications.
The Texas Tax Rate Baseline
ChatGPT started by establishing what the “average Texas resident” actually pays in taxes. Texas has no state income tax, so residents face a state and local tax burden of roughly 7.7% to 8% of income through sales, property and local taxes.
Adding federal income tax changes the picture dramatically. Recent federal data shows the average effective federal income tax rate across taxpayers sits around 14%. When you combine federal taxes with Texas’ state and local burden plus payroll taxes, the total effective tax rate for a typical Texan lands around 21% to 23%.
ChatGPT used 22% as the working figure for total tax burden — a reasonable middle ground representing what average Texans actually pay across all taxes.
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The US Billionaire Wealth Numbers
The artificial intelligence pulled data showing that roughly 801 U.S. billionaires hold combined wealth of $6.22 trillion. That’s just U.S.-based billionaires, not the global total.
U.S. billionaire wealth has grown significantly in recent years. The Institute for Policy Studies tracked growth from $5.529 trillion to $6.22 trillion over a four-year period, though precise annual gains aren’t published the same way global figures are.
ChatGPT estimated U.S. billionaire annual wealth gains at approximately $733.4 billion by scaling from global data. Worldwide, billionaire wealth increased by $1.9 trillion year-over-year. Since U.S. billionaires represent roughly 38.6% of global billionaire wealth, the AI calculated their annual gain at about $733 billion.
This is an approximation rather than exact tracking, but it provides a working baseline for calculations.
Scenario 1: Taxing Annual Wealth Gains
ChatGPT’s first scenario taxed only the annual wealth gains of U.S. billionaires at 22% — the same total effective rate average Texans pay.
The math: $733.4 billion in annual gains multiplied by 22% equals roughly $161.4 billion in tax revenue annually.
That’s $161 billion the federal government currently doesn’t collect because most billionaire wealth growth comes from unrealized capital gains, which aren’t taxed until assets are sold. Billionaires can hold appreciating stocks for decades without triggering tax events.
The AI noted this scenario would require major structural changes to tax law since the U.S. currently taxes income when realized, not paper gains from stock appreciation. Implementing this would be “politically and legally nontrivial.”
Scenario 2: Taxing Total Billionaire Wealth
The second scenario applied the 22% rate to the entire $6.22 trillion in U.S. billionaire wealth rather than just annual gains.
The calculation: $6.22 trillion multiplied by 22% equals approximately $1.37 trillion. It’s essentially a wealth tax or one-time levy that treats net worth as fully taxable income, which current tax law explicitly doesn’t do.
The AI warned this interpretation conflates legal tax bases and would face enormous implementation challenges including capital flight, asset valuation disputes and constitutional questions about whether wealth taxes are even legal.
Scenario 3: State and Local Taxes Only
The third scenario matched only Texas’ state and local tax burden of 7.8%, excluding federal taxes.
Applied to annual wealth gains of $733.4 billion, this generates roughly $57.2 billion annually. Applied to total wealth of $6.22 trillion, it produces about $485 billion.
ChatGPT suggested this scenario asks what would happen if billionaires paid the same share of state and local taxes as average residents rather than avoiding sales and property-style tax burdens through legal structures.
The Reality Check on Implementation
ChatGPT didn’t pretend these scenarios are simple policy switches.
Income versus wealth represents the fundamental challenge. U.S. tax law taxes income when realized. Much of billionaire “income” is unrealized stock appreciation. Taxing unrealized gains requires restructuring how American taxation works.
Higher taxes on billionaires could reduce asset sales (reducing realizations), increase tax avoidance strategies or cause wealthy individuals to relocate to lower-tax jurisdictions. Real revenue depends on enforcement capability and policy design.
What the Numbers Actually Mean
ChatGPT’s calculations show that even the most conservative scenario — taxing only annual wealth gains at 22% — would generate $161.4 billion yearly. That’s roughly equivalent to the entire NASA budget, the Department of Education budget or substantial portions of infrastructure spending.
The more aggressive wealth tax scenario producing $1.37 trillion represents about one-third of total annual federal spending. It’s enough to fund Social Security for nearly a year or Medicare for more than a year.
Of course, this is all a theoretical exercise, but the math makes clear that the potential is there. The question now is whether policymakers — pushed by public demand — will find the will to turn possibility into policy.
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT What Would Happen If Billionaires Paid Taxes at the Same Rate as the Average Texas Resident
