The Prof G Pod with Scott Galloway

No Mercy / No Malice: The Epstein Tax

February 28, 2026

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  • The concentration of wealth, exacerbated by regulatory capture and policies like unlimited political spending, is reaching levels comparable to historical periods of extreme inequality, fueling public disgust exemplified by reactions to the Epstein documents. 
  • Wealth taxes, while tempting as a solution to inequality, are historically ineffective due to capital flight, valuation difficulties, and constitutional challenges, suggesting alternative tax reforms are necessary. 
  • The current tax system disproportionately benefits the wealthy through mechanisms like the carried interest loophole and the ability to borrow against assets to defer capital gains tax, necessitating reforms such as taxing capital gains as ordinary income and strengthening IRS enforcement. 

Segments

Income Inequality and Epstein Tax
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(00:01:22)
  • Key Takeaway: The Epstein class fuels disgust over income inequality, but wealth taxes are deemed an insufficient answer to reigning in the rich.
  • Summary: The discussion frames the fallout from the Epstein documents as adding fuel to existing public disgust regarding income inequality and the super-wealthy. Capitalism’s incentive structure is noted as being exploited by the ‘gilded few’ through regulatory capture to expand their wealth. The Gini coefficient for the U.S. is cited as being above 0.8, a level historically associated with severe societal unrest.
Global Wealth Tax Proposals
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(00:05:00)
  • Key Takeaway: Governments globally are proposing wealth taxes to address fiscal holes and disparity, though historical data shows most such taxes fail or cause capital flight.
  • Summary: The world’s richest individuals accumulated over $2 trillion in net worth last year, prompting global governmental action to address disparity. Examples include proposed billionaire taxes in California and income tax hikes in New York City. Historically, many OECD countries repealed wealth taxes because they collected little revenue and risked stifling innovation or causing the wealthy to relocate.
Reforming Capital Gains Taxation
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(00:08:06)
  • Key Takeaway: Closing the carried interest loophole and taxing borrowing against assets as a taxable event are proposed common-sense tax reforms.
  • Summary: Taxing carried interest as ordinary income, rather than capital gains, could raise approximately $15 billion over ten years, as capital income is unfairly favored over earned income. The ‘buy, borrow, die’ strategy allows the wealthy to defer tax liability by borrowing against appreciating assets instead of selling them. Treating borrowing against assets as a taxable event could potentially raise over $100 billion over a decade.
IRS Enforcement and AMT
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(00:10:42)
  • Key Takeaway: A hobbled IRS is a massive regressive tax cut for the rich, and reinstating a robust Alternative Minimum Tax (AMT) is proposed to capture underreported income.
  • Summary: The tax gap—the difference between taxes owed and collected—surged to nearly $700 billion in 2022, largely due to underreporting by richer taxpayers. Strengthening IRS enforcement is deemed critical for moving the needle on wealth inequality. A reformed individual AMT, taxing income above $1 million at 40% and above $10 million at 60%, could raise hundreds of billions annually from the top 0.2%.
Billionaire Tax Avoidance Strategies
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(00:13:09)
  • Key Takeaway: Billionaires actively relocate to low-tax states like Florida to avoid state-level capital gains taxes accrued while residing in high-tax states like Washington or California.
  • Summary: Wealthy individuals like Jeff Bezos and Mark Zuckerberg are moving from states imposing capital gains taxes (like Washington) to states without them (like Florida). The speaker argues that while relocation is possible, billionaires should not escape taxation on wealth accrued while benefiting from infrastructure and education in the states they leave. The segment concludes that functioning IRS, taxing capital gains as income, and eliminating loopholes are necessary, not revolution.