Innovation is a primary driver of GDP growth, acting as an engine that increases productivity, creates new markets, and enhances efficiency. By applying new ideas and technologies, economies produce more goods and services with the same inputs, leading to higher wages, business profitability, and sustained economic expansion.

Alternative sources of investment mostly provide complementary and early-stage funding for start-ups. They certainly have a place but cannot entirely replace super-rich investors due to differences in flexibility, risk tolerance, scale, speed, priorities, time horizon, personal commitment and mentorship.

In contrast to institutional investors, the super-rich are well-positioned to take on the higher risks of young companies, provide patient funding for longer time horizons and offer hands-on guidance to foster innovation. And to quote AI: “Innovation is a primary driver of GDP growth, acting as an engine that increases productivity, creates new markets, and enhances efficiency.”

The economic benefits of high-net-worth individuals ("super-rich") investing in startups rather than ordinary people—typically via angel investing or venture capital—derive primarily from their ability to provide "patient capital" and absorb high risks without immediate pressure for returns.

Compared to other investors, the super-rich are more risk-tolerant, hands-on, and willing to make long-term commitments. They often favor private equity over public stocks and allocate more capital to illiquid investments.

If the super-rich sold large amounts of stock for a wealth tax, the shares would likely be absorbed by institutional investors (pension funds, mutual funds), sovereign wealth funds, corporate share buyback programs, and the broader, high-net-worth market.

A 5% wealth tax requiring billionaires to liquidate assets would likely force significant, consistent sell-offs of company stock, potentially diluting founder control, depressing share prices, and discouraging long-term, high-risk investments.

I’m ultimately interested in how a billionaire wealth tax would impact the US economy and American people. To answer that question, even tentatively, requires answering a lot of other questions.

And from a recent paper by real-estate economist Kholodilin, Konstantin, who has reviewed over 200 rent control studies, dating back decades and spanning six continents:  

“The most prominent effects of rent control are decline of rents for controlled dwellings, reduced residential mobility, lower construction, lower quality of housing, higher rents for uncontrolled dwellings, and lower property prices.” - Kholodilin, Konstantin (2025) “The impact of governmental regulations on housing market: Findings of a meta-study of empirical literature”

While US studies often show a negative association, studies in Western Europe, where different labor relations systems are common, frequently find that unions do not depress innovation… An example would be in Denmark, where unions contribute to innovation and competitiveness through the cooperative "flexicurity" model. This model allows employers to hire and fire as needed to adapt to changing market conditions and adopt new technologies quickly, combined with the country’s strong social safety net that provides income security during job transitions, and government-funded training and education programs to help unemployed workers re-enter the workforce.

Based on the experience of OECD countries and the lower estimate given for a U.S. wealth tax by Saez and Zucman., I’m going to assume a wealth tax in the U.S. would bring in around 1.5% of total federal tax revenue on average. Last year the IRS collected close to $5 trillion in tax revenue. $5 trillion x 1.5% = $75 billion.