Texas famously has no state income tax. Business taxes are also famously low. So where does the state get its money? Property tax is largely the answer. While this sounds somewhat reasonable, it has two problems. The first is that it is very regressive. The richest people in Texas (and everywhere) tend to spend a much smaller proportion of their wealth on housing. In fact, a very wealthy person doesn’t have to live in an expensive house at all.

An even bigger problem for most people is that they don’t really own their house. They have a mortgage. So they are literally paying a tax on a debt. It is difficult to get figures but there is $10 trillion in mortgage debt in the US. So Texas, at least, is funded by a tax on middle class debt. Sounds a bit outrageous, and maybe it is.

So why can’t we tax other debts? One problem (well, I consider it a problem) is very wealthy Americans have untaxable assets, like stock, and are only able to operate tax-free by taking out loans against these assets. Like the assets, these loans aren’t taxed either. So the wealthiest Americans go along year after year, decade after decade, paying no tax. So why not tax their debt? We do it to the rest of America.

There’s an easy way to tax billionaires that would actually work