What If the Richest Americans Paid Taxes Like Hawaii Residents? ChatGPT's Answer Might Surprise You

When you look at which states levy the highest tax burden on citizens, Hawaii consistently tops the lists. Residents there pay around 14% of their income in combined state and local taxes—significantly above the national average. This raises an interesting question: what if billionaires in the US faced the same tax rate? To explore this scenario, an experiment was conducted using ChatGPT to model the financial outcomes.

The Gap Between Billionaire Wealth and Actual Taxable Income

Here’s where things get tricky. The richest people in America control between $5.5 trillion and $6.6 trillion in total wealth. That’s an enormous number. But wealth sitting in stock portfolios doesn’t automatically become taxable income. This distinction matters enormously for tax calculations.

Billionaires only pay taxes when they realize income—typically through selling assets, collecting dividends, or drawing salaries. A founder holding $10 billion in company stock doesn’t owe taxes on that position until they liquidate it. Current effective tax rates for billionaires in the US range wildly depending on methodology. Academic estimates swing from as low as 2% to as high as 24%, depending on what you count as income.

Running the Numbers: Two Realistic Scenarios

ChatGPT modeled what would happen using two different assumptions about how billionaire wealth converts to taxable income annually.

Conservative Case: 1% Annual Realization

Assume billionaires realize just 1% of their wealth each year through business operations, asset sales, or compensation. That generates $55 billion to $66 billion in taxable income across all billionaires in the US. Apply the 14% Hawaii rate: you get $7.7 billion to $9.2 billion in new annual tax revenue.

If current collections are at the 2% effective rate estimate, the additional take would be roughly $6.6 billion to $7.9 billion per year.

Aggressive Case: 5% Annual Realization

Paint a scenario where billionaires realize 5% of wealth annually through capital gains, dividends, business profits and salaries. This yields $275 billion to $330 billion in taxable income. At 14%, that’s $38.5 billion to $46.2 billion yearly. The net revenue gain over the 2% baseline: $33 billion to $39.6 billion annually.

The math gets tighter if you assume billionaires already pay closer to 24% currently—in which case this policy might paradoxically cut their taxes rather than raise them.

What Tens of Billions Actually Buys

ChatGPT contextualized these sums by explaining real-world program implications. $35 billion annually could meaningfully expand child care access, increase housing assistance, or accelerate climate investments. It would dent federal deficits without solving them entirely. For scale: that’s genuine money that changes lives in targeted areas, but it doesn’t revolutionize total government spending or close massive structural budget gaps.

The Behavioral Response Reality Check

This is where theory meets practice. ChatGPT noted a critical assumption problem: the math assumes billionaires passively accept higher tax bills. They won’t. “Tax planning and avoidance would rise substantially,” the AI flagged. Wealthier individuals deploy sophisticated strategies—deferred income structures, alternative compensation arrangements, timing manipulation—that intensify when rates climb. Some might change residence to lower-tax jurisdictions. Others might retain earnings inside corporations rather than taking personal distributions.

These behavioral shifts mean actual revenue collected falls below projections. The gap can be substantial.

Political and Legal Headwinds

ChatGPT didn’t downplay the obstacles. “Billionaires and their companies have outsized political influence; any serious policy faces litigation and intense lobbying,” the AI warned. Any attempt to raise billionaire tax rates triggers immediate legal challenges, sophisticated lobbying campaigns, and potential constitutional questions—especially if wealth taxes get proposed rather than income taxes.

More feasible approaches might include raising rates on realized capital gains, increasing top marginal income brackets, or creating surtaxes on high earners. Each path carries different enforceability tradeoffs and economic ripple effects.

The Real-World Outcome If This Actually Happened

Strip away the complexity and here’s what ChatGPT suggested would actually unfold:

Revenue collected: Somewhere between $7 billion and $40 billion annually, depending on realization assumptions. That’s real money for specific priorities.

Tax avoidance spike: Billionaires accelerate accounting complexity, restructure how they extract wealth, and potentially relocate. Projected revenue never fully materializes.

Legal gridlock: Years of court battles determine whether mechanisms violate constitutional protections. Implementation stalls.

Political warfare: Lobbying campaigns frame this as either long-overdue fairness or destructive class warfare. Carve-outs and delays proliferate. Media divides sharply.

Net result: Revenue flows in—likely somewhere between the low and high projections—but below theoretical maximums and above zero. Enough to fund specific programs. Not enough to solve structural federal challenges.

The Income Versus Wealth Distinction That Changes Everything

ChatGPT emphasized one crucial point: taxing 14% of billionaire annual income produces billions. Taxing 14% of total billionaire wealth produces hundreds of billions but faces implementation barriers that might make it politically impossible. The difference between taxing flows versus taxing stocks fundamentally reshapes what’s realistic.

For billionaires in the US, this distinction determines whether a policy remains theoretical or actually gets enforced.