This column was originally published for the Ball State University Center for Business and Economic Research Weekly Commentary blog.
By Michael J. Hicks
June 14, 2026
As Democrats look forward to election season, I’d like to caution against looming policy mistakes lurking underneath what may be a very popular electoral position — the hatred of billionaires and corporations. A better target would be the systems that have, well, made billionaires so hated.
I admit that running an angry, anti-corporation, anti-billionaire campaign might be fun and electorally effective. But Americans will be worse off, for many reasons, if the next president and Congress embark on an anti-corporate campaign.
I see three potential bad policies: a specific billionaire tax, the break-up of large corporations and a return to very high corporate taxes. These ideas would make ordinary Americans poorer, cause capital flight and functionally reduce our national income. Moreover, these policies aren’t going to balance our budget.
First, most wealth held by billionaires like Elon Musk or Jeff Bezos is really locked into companies they own. We can, and perhaps should, tax the earnings from that stock ownership at a higher rate, but there’s just not endless money to be taken from these folks.
If we taxed billionaires at confiscatory rates, they would just sell off their companies or corporate stock. That might seem fun, but it wouldn’t create any realistic flow of tax revenues, and it has destructive side effects.
Second, businesses will do much to dodge large tax increases. We should expect capital flight out of the U.S. I know some people will say, “So what, I don’t care if capitalists pull their money out.” If you feel that way, you should be prepared for, say, 9% mortgage rates and high unemployment.
Finally, there isn’t enough wealth among billionaires or corporations, at any tax rate, to balance our federal budget. The coming decades will require broad tax increases and deep spending cuts to balance the budget and reduce our debt.
Please don’t misunderstand my argument. Musk, and to a lesser degree Bezos, are execrable men. Musk likely committed dozens, if not hundreds, of crimes during his time with the Department of Government Efficiency. He should be investigated and prosecuted, if that is the case, regardless of his wealth.
The problem isn’t too many billionaires, but how so many people became billionaires at the expense of taxpayers. That should be the prime focus of the next several elections.
The use of tax dollars to directly support or subsidize businesses inherently risks corruption, even when it is done with the very best of intentions.
Federal tax incentives tend to be very political and targeted to specific industries, such as electric vehicles. For example, Musk’s Tesla would likely not exist without EV tax credits. While it seems easy to justify federal investment to speed adoption or become a global provider of EVs, we’ve spent maybe a half-trillion dollars doing so.
The real problem is that government is very bad at picking winners, but losers are very good at picking governments. That brings me to my favorite example.
State and local tax abatements and tax incentives run state governments close to $100 billion per year. Indiana spends close to $2 billion each year on giveaways to businesses. Indiana might have already given away more tax incentives to data center companies than the other 49 states combined.
The idea behind tax breaks sounds tempting. Just excuse taxes for a big business, assuming that new jobs and higher incomes will cover the lost revenue. The problem is it does not.
There are literally hundreds of peer-reviewed studies of tax abatements and tax incentives. The consensus from this literature is that, in total, they do nothing for state or local economies. Incentives for capital are actually a big net-negative for states (as anyone with even a passing knowledge of the LEAP District will understand). Incentives for people appear to have a modest effect.
What this means is that Hoosier taxpayers are spending or foregoing $2 billion a year in tax abatements and subsidies that do nothing for the economy except enrich one set of people (capital owners) at the expense of another set of people (taxpayers).
And that is how this system becomes corrupt. Because tax abatements and incentives are nothing but a transfer from one set of folks to another, they attract a large army of advocates.
There are whole career fields of lawyers and accountants who exist solely to apply for tax incentives, process tax incentives and charge a fee for this work. These people are powerful voices in the legislature, as well as county and city governments.
Just to put this in context, Indiana taxpayers spend about $1.35 billion each year on supporting higher education through scholarships and direct payments to universities. We spend about 50% more on tax incentives to businesses.
The progressive movement could certainly find common ground outside their own circles in opposing these incentives and abatements. Libertarians have long opposed tax incentives, and free-market conservatives (who used to be an important voice in the GOP) also oppose them.
I’m not good at giving political advice, but when it comes to actual policy, progressives would be wise to focus on the corrupting practices that gave rise to anger about billionaires. Tesla paid almost no tax on the $5.7 billion in earnings last year, while Amazon paid an effective federal tax rate of 1.4% last year on $89 billion in profit.
A new public-school teacher making $45,000 would pay a higher federal tax rate than Tesla and Amazon paid — combined. If you cannot make political hay out of that fact, you probably should stay out of politics.
Michael J. Hicks is professor of economics and the director of the Center for Business and Economic Research at Ball State University. He previously served on the faculty of the Air Force Institute of Technology’s Graduate School of Engineering and Management and at research centers at Marshall University and the University of Tennessee. His research interest is in state and local public finance and the effect of public policy on the location, composition, and size of economic activity.
The views expressed here are solely those of the author, and do not represent those of funders, associations, any entity of Ball State University, or its governing body. Also, the views and opinions expressed do not necessarily reflect the views of The Indiana Citizen or any other affiliated organization.
