• The families of celebrities like Anderson Cooper and King Princess have been rich for generations.
• Some families, like the Gyllenhaals, became wealthy through the entertainment industry.
• Others, like the Delevingnes, have connections to royals.

Many celebrities have built their wealth from the ground up, but some were born into luxury.

Among these wealthy families are celebrities like Anderson Cooper, Julia Louis-Dreyfus, and Nick Kroll, who have had access to vast wealth and opportunities from an early age.

These stars were set up for success before stepping into the spotlight, which, in some cases, shaped their path to fame and fortune.

Here are 15 celebrities who were raised in wealthy families before they became famous.

1. Nick Kroll

Kroll is an actor, comedian, writer, and producer known for Comedy Central's "The Kroll Show" and for creating and starring in Netflix's "Big Mouth" and "Human Resources," among other hit shows, but he's not the only success story in his family. 

His father, Jules Kroll, founded a corporate investigation company, Kroll Inc., which he sold in 2004 for almost $2 billion, Forbes reported in 2014.

Nick Kroll grew up in Westchester County, New York. In 2009, he told The New Yorker that he and his siblings had a relatively normal childhood. He also said that although he was grateful that his father made time for him despite his job, he felt embarrassed when Jules would arrive at his Little League games in a limousine.

2. Anderson Cooper

Journalist and commentator Anderson Cooper is a direct descendant of the Vanderbilts.

His great-great-great-grandfather, Cornelius Vanderbilt, built his fortune primarily through investing in steamships and railroads.

"He had more money than the US Treasury," Cooper told CBS in 2021.

Cooper's mother, Gloria Vanderbilt, grew up an American socialite because of her family's status. She later became an artist, actor, designer, and author. She died in 2019.

His father, Wyatt Emory Cooper, was Vanderbilt's fourth husband. Before he died at the age of 50, he worked as an author and an actor.

3. Gwyneth Paltrow

Gwyneth Paltrow comes from a family of entertainment-industry natives. She spent her childhood at prestigious private schools in Los Angeles and New York City before dropping out of college to act.

Bruce Paltrow, her father, was a nine-time Emmy-nominated director and producer. His most notable titles include "St. Elsewhere" and "White Shadow." Meanwhile, her mother is Emmy- and Tony-winning actor Blythe Danner of "Meet the Parents," "Meet the Fockers," and "The Last Kiss."

Despite her parents' success, Paltrow refers to herself as "completely self-made." 

"People think, 'She's just a rich kid.' Until I was 18, I was. Then I was broke. I've never taken a dime off my parents. I'm completely self-made," she told Glamour in 2016.

4. Cara Delevingne

Supermodel and actor Cara Delevingne is the daughter of Charles Delevingne, a successful real-estate developer, and Pandora Delevingne, a socialite. Her paternal grandmother was a socialite, and her paternal grandfather was a notable lawyer and politician.

But that's not where it ends. According to Vogue, Cara's maternal grandfather, Sir Jocelyn Stevens, owned Queen magazine, which is now Harper's Bazaar. Further, her maternal grandmother, Janie Sheffield, was a lady-in-waiting to Princess Margaret, the sister of Queen Elizabeth II.

5. Julia Louis-Dreyfus

Julia Louis-Dreyfus is the great-great-granddaughter of Léopold Louis-Dreyfus, who founded the Louis Dreyfus Company, a merchant firm that deals primarily with agriculture, food, and shipping.

Her father, Gerard Louis-Dreyfus, eventually became chairman of the company. In 2006, about 10 years before his death, Forbes estimated his net worth at $3.4 billion and ranked him the 200th-richest billionaire in the world.

In 2018, the "Seinfeld" star told The New Yorker that her father's wealth is overestimated by the press and that she finds the term "billionaire heiress" to be "heinous."

6. Jake and Maggie Gyllenhaal

Their father, Stephen Gyllenhaal, is an Emmy-winning director who has worked on films such as "Paris Trout," "Homegrown," and "A Dangerous Woman." Their mother, Naomi Foner Gyllenhaal, is an Academy Award-nominated, Golden Globe-winning screenwriter whose most notable film is "Running On Empty."

The Gyllenhaal siblings, Maggie and Jake, have had prolific careers since their costarring breakout roles in "Donnie Darko" in 2001.

In 2010, Jake told The Guardian, "My mother would say that there are people who have so much money who don't give any of it away, and there are other people who have much less money, who give more than the richest people in the world. It should all be about giving something back."

 

7. King Princess

Pop artist King Princess — or Mikaela Mullaney Straus — is the great-great-grandchild of Isidor and Ida Straus.

Before the couple fell victim to the Titanic's sinking, Isidor served in the United States Congress and co-owned Macy's with his brother. Isidor and Ida Straus have been depicted in multiple movies and have a memorial garden in New York City.

In 2019, King Princess told Rolling Stone that she didn't inherit their money.

"They were very rich and Jewish, [but] I didn't inherit any of this money. It was a little frustrating, but whatever," she said.

The pop star's father, Oliver Straus, is also successful. He owns a recording studio in Brooklyn called Mission Sound, where world-famous bands like the Arctic Monkeys have recorded music.

8. Armie Hammer

Armand Hammer, Armie Hammer's great-grandfather, was an oil tycoon who managed Occidental Petroleum Corporation. In 1986, Forbes estimated Armand Hammer's net worth to be $200 million.

However, Armand Hammer's biographer, Neil Lyndon, referred to him as "the most satanic man of the second half of the 20th Century" and the "embodiment of sin [and] ruthless ego" in a 2022 docuseries, "House of Hammer."

Armie Hammer has also been mired in controversy. In 2021, multiple women accused him of sexual and emotional abuse. At the time, Armie said any interactions with his partners were consensual and denied the allegations. The Los Angeles Police Department investigated a claim of sexual assault, but he was not charged. In 2023, he told Air Mail he'd been emotionally abusive to his accusers. 

9. Lana Del Rey

Lana Del Rey, whose given name is Lizzy Grant, is the daughter of Rob Grant, the founder of WebMediaProperties.com. According to Who API, Grant's company operated 1,600 websites and owned about 800 domain names as of 2012.

A 2012 article in The Guardian by Paul Harris discusses how Lana Del Rey hid her real identity as she rose to stardom.

"People were suspicious of the way Grant's failed album, and all her social media websites appeared to have been scrubbed from the internet just before Del Rey appeared," Harris wrote. 

The same article also claims that her father backed her career when she was just starting out.

10. Nicola Peltz Beckham

Actor Nicola Peltz Beckham, who has appeared in TV shows like "Bates Motel" and "Welcome to Chippendales" and movies including "Transformers: Age of Extinction," married Brooklyn Beckham — son of Victoria and David Beckham — in 2022. But even before her wedding day, she was part of a high-profile family known for its influence in business and social circles.

She was born in 1995 to parents Claudia Heffner and Nelson Peltz in Westchester, New York — her father is the founder of the investment firm Trian Fund Management and has an estimated net worth of $1.5 billion according to Forbes.

In a 2024 interview with WWD, Peltz Beckham acknowledged that she didn't have an upbringing like that of her character in "Lola," in which she starred as a stripper.

"I wanted to write a story from a person's perspective and another point of view that was not my personal view and not my upbringing. I am an actress and my dream is to get to look at the world from different perspectives," she said.

11. Stella Lefty

Singer Stella Lefty is the daughter of Eric Lefkofsky, CEO of Tempus AI and founder of Groupon. In Forbes' 2026 ranking of the 400 wealthiest Americans, Lefkofsky ranked 261st with an estimated net worth of $6.5 billion.

Business Insider's Callie Alhgrim reported a lot of negative online discourse about Lefty regarding her fame in relation to her father.

"Obviously, there's going to be this conversation around it, which I totally understand," Lefty told Vanity Fair in an interview published in August this year.

12. Jessica Pegula

Tennis player Jessica Pegula is the daughter of Terry and Kim Pegula, who own the Buffalo Bills and Buffalo Sabres. Terry Pegula founded the oil and gas company East Resources, which he sold the majority of for $4.7 billion in 2010, according to Forbes.

Terry Pegula ranked 120th in Forbes' 2026 list of the 400 wealthiest Americans.

Jessica Pegula said in an episode of Netflix's "Break Point" that "some people get this image that it's really easy for me because my dad is very wealthy, but that didn't happen till I was 17 or 18," adding that "they gave me a great childhood and instilled a lot of work ethic in me."

13. Kate and Rooney Mara

Actors Kate and Rooney Mara are the daughters of Chris Mara and Kathleen Rooney, who come from NFL royalty.

Chris Mara's grandfather founded the New York Giants, and Rooney's grandfather founded the Pittsburgh Steelers, according to People.

In 2015, Forbes estimated the Rooney family's net worth at $1.2 billion.

14. Emma Navarro

Tennis player Emma Navarro is the daughter of billionaire businessman Ben Navarro.

He cofounded Sherman Financial Group and has an estimated net worth of $3.2 billion, according to the Forbes 2026 World Billionaires list.

In a 2021 interview with Charleston Magazine, Emma Navarro said: "My dad has always been in my corner, getting me the coaching and training, whatever I needed."

15. Gracie Abrams

Singer Gracie Abrams is the daughter of Katie McGrath and J.J. Abrams.

J.J. Abrams is a filmmaker behind shows like "Lost" and major films, including some in the "Star Wars" series. He is the co-CEO of Bad Robot Productions, which Katie McGrath also leads.

"I had a safety net, and that allowed me the ability to experiment and to concentrate, and I had the gift of time to dedicate to doing this thing I loved," Abrams said in an episode of The New York Times' Popcast.

No matter what happens in Tuesday's elections, support for wealth taxes keeps growing. Its justification is based on the idea that the very rich owe all of us something, and taxing their fortunes is collecting on that debt. We're told their success fuels inequality and that it's selfish of them to keep so much, especially if they don't proclaim that they want to do more for society.

Former International Monetary Fund chief economist Olivier Blanchard of France recently gave this narrative a clear voice. Writing on X, he wondered why California's wealthiest are spending so heavily to defeat Proposition 40, the supposed one-time 5 percent tax on the net worth of billionaires. Blanchard added that billionaires "typically have not indicated that they are building their wealth to eventually make the world a better place."

The entire notion misunderstands how fortunes are made. In a market economy, people don't build great wealth first and redeem it later through good works. They build it by making the world better first.

When I buy an $800 smartphone, it's because I value the phone more than whatever else I would have bought with the money. The seller values my $800 more than they do the phone. We both walk away richer by our own measure. Neither owes the other anything more.

Repeat this exchange a few hundred million times, and vast fortunes take shape for the people who create amazing technology so abundantly and affordably that we take it for granted. More importantly, though, people hand over every cent of it voluntarily.

As my colleague Arnold Kling aptly explained over the weekend, "Profits are earned within a positive-sum game for society. Profits induce firms to serve consumers and to innovate." The drive for wealth taxes relies on "the opposite point of view. It regards profits as something that businesses take from the rest of us, as if we can take innovation and efficiency for granted. [It] acts as if we are in a zero-sum environment in which one person's gain is necessarily another person's loss."

And, yes, the gains are divided more fairly than people think. Nobel laureate and Yale University economist William Nordhaus estimated that innovators in the U.S. business sector personally captured, on average, a mere 2.2 percent of the social surplus they created between 1948 and 2001. The other 97.8 percent went to everyone else in the form of lower prices, higher wages, better products and goods, and services that didn't previously exist.

In short, the world has already been compensated, many times over.

Those urging billionaires to acquiesce also err by blithely assuming that the state that grabs the money will use it well enough to "make the world a better place." The burden of proof is on them. California's government already spends roughly $350 billion a year. What will the extra few billion accomplish that the rest hasn't?

"Giving money and power to government is like giving whiskey and car keys to teenage boys," as journalist and satirist P.J. O'Rourke used to say. Maybe California's billionaires aren't eager to fund a Merced-to-Bakersfield rail line that the state prices around $35 billion and its inspector general puts closer to $48 billion. Perhaps they're hesitant to backfill pension funds like the California Public Employees' Retirement System, whose staff concedes is unlikely to hit an assumed 6.8 percent return without leaning on private equity.

Prop 40's revenue is earmarked for health care, but money is fungible. In the end, California has one budget. Every earmarked dollar frees another for something else. Some billionaires might simply have concluded that their philanthropy does more good elsewhere, or that their dollars are more beneficial when invested in private enterprises.

The tax also doubles down on California's worst habit: spend, spend, spend, and then tax, tax, tax. The money is never enough to cover all the spending. A one-time levy spent over five years doesn't fix that. It funds new commitments with temporary money. Some will want to make the tax permanent, which its intellectual architects clearly prefer and may have made possible. And yet that still won't be enough.

That's the commitment problem that Blanchard admits California can't solve. Billionaires are wise to distrust the "one-time" promise.

What worries me most is the moral framework. When a society convinces itself that the people making life better and less costly are the problem, we eventually stop getting those people.

Contrary to Blanchard's naive belief, billionaires aren't lacking in public spirit. Even if we ignore their often massive charitable giving, we can't forget that the market already collected their contribution and handed a large share of it to the rest of us. We should stop demanding they apologize for the other two cents.

COPYRIGHT 2026 CREATORS.COM

The post Billionaires Have Already Paid Us Back. So Why Does California Want More? appeared first on Reason Magazine.

• Elon Musk says it's "pointless" to save for the long term, as he expects "super intelligent abundance."
• The Tesla and SpaceX CEO was replying to an X user who said they'd stopped stressing about spending.
• Musk previously said that if he's right about the future, "saving for retirement will be irrelevant."

Elon Musk says it's not worth saving for the long term, as nest eggs won't matter.

"Saving money for the distant future is pointless with the advent of super intelligent abundance," Musk said in an X post on Thursday, doubling down on one of his most polarizing predictions.

The Tesla and SpaceX CEO was replying to a user who said they weren't stressing over their "questionable financial decisions" because a future of abundance meant "most of it won't matter in a few years anyway."

The world's richest person — who has a nearly $1 trillion net worth — has previously advised against saving for decades to come.

"Don't worry about squirreling money away for retirement in 10 or 20 years," Musk said during a podcast episode released in January. "It won't matter."

"If any of the things that we've said are true, saving for retirement will be irrelevant," he added.

Musk said at the time that he expects progress in AI, energy, and robotics to supercharge productivity, resulting in plentiful resources so that "anyone can have whatever stuff they want."

In that world, he continued, everyone would have access to "better medical care than anyone has today," there would be "no scarcity of goods and services," and "you can learn anything you want about anything for free."

Business Insider spoke to seven personal finance and AI experts about those comments, and they all agreed people should keep saving for retirement given the risk that Musk may be wrong.

Musk laid out an even more utopian vision on a recent podcast, predicting that advances in robotics and space travel would lead to a multiplanetary economy, at which point "money becomes irrelevant" and "conventional currency will not matter."

Several other tech leaders have predicted AI and other technologies will transform the way we live.

Microsoft cofounder Bill Gates said on a recent podcast episode that AI will lead to "true abundance" with robots able to "build houses, grow food, do surgery."

But he also warned the next two decades will be "as tumultuous a period as there's been in human history," as technological advances will mean "none of the things that human labor provides to the economy will be necessary for most goods and services."

Similarly, Musk has predicted a "bumpy" transition to a brighter future. He's suggested government checks for all as the best solution to AI-fueled job destruction.

The offers and details on this page may have updated or changed since the time of publication. See our article on Business Insider for current information.

• For Love & Money is a column from Business Insider answering your relationship and money questions.
• This week, a reader wants a portion of their inheritance now, rather than after their parents die.
• Our columnist says it's OK to ask, but that it's important to be self-aware and approach thoughtfully.

Dear For Love & Money,

I am lucky enough to come from a family with a lot of generational wealth. My great-grandparents passed down a large fortune to their kids, who passed it down to my parents when they died.

Before their deaths, my grandparents also used a large part of it to make their children's and grandchildren's lives better. They gave my parents enough to pay off most of their house, paid for my college, bought me my first car, and did the same for my sister and cousins.

Now, my parents have their share of the family inheritance. My sister and I fully expected our parents to follow our grandparents' example and give us some money up front — not the whole inheritance, but enough to help us pay off some debt and make our lives a little easier.

My parents have shown no signs of giving us a penny right now. I am sure they intend to leave it to us when they die, but until then, it doesn't seem to have even occurred to them to bless their children and grandchildren the way their parents did.

My niece will begin college next year, and my sister has dropped several hints. My wife says I need to just come out and ask them for some of the money because we could use the cash, but the idea of doing that makes me really uncomfortable. What do I do?

Sincerely,

Possibly Presumptuous

Dear Possibly,

If you are presumptuous — and perhaps you are — you have every reason to be. A large inheritance, it seems, is a family tradition (you lucky thing). Traditions are typified by the rituals that accompany them. In your family, this has looked like the bulk of the cash going to the next generation as a traditional inheritance, with a tidy sum set aside to ease the way for all direct descendants in the form of an early inheritance.

As such, it makes sense that you would have those expectations. However, no family tradition happens automatically, and each new generation must determine which parts of the legacy to leave and which to keep. In your case, this decision belongs to your parents.

I agree with your wife that asking directly is your only option for an advance inheritance payment. After all, your sister has already tried the heavy hinting method, and while you refer to it as "generational wealth" and "family inheritance," the money is your parents'.

Before you talk to them, however, I suggest you examine your motives first. There are two different types of entitlement: justified and absurd. Justified entitlement looks like someone driving to pick up their paycheck after working all week. Absurd entitlement looks like an adult racking up a credit card on a luxury vacation and then expecting their parents to pay it because they raised them to enjoy that lifestyle.

Based on your letter, I would guess your entitlement is justified — or at the very least, understandable. There is nothing wrong with having expectations because your family has always done something a specific way. However, the justified entitlement begins veering into the realm of the absurd if you feel resentment toward your family for not giving you something that isn't yours.

Self-awareness in this regard is crucial for personal growth. When I called you lucky at the beginning of this letter, I meant it. I, like most people, don't have an inheritance to look forward to, to help pay off my mortgage or send my kids to college. You hit the generational wealth lottery just by being born into the right family, as did your parents. I don't say this as a jealous sneer, but as a reminder.

You don't need to bow your head in shame for lucking out, but you must remember this money is a gift. Nobody likes the kid screaming at the tree on December 22nd because they want to open their presents early.

Not being that person is really a matter of tone. If your parents sense you're upset with them for even having to ask, they will be understandably hurt, which will only break down your dynamic. If you come to them with gratitude, humility, and curiosity, they might remember when they were in your shoes.

I mention curiosity because your parents may have hopes and expectations for this inheritance of their own. I can only imagine they had years to plan what they would do with it when it was finally their turn. Ask them about it. Show them your intention isn't to leapfrog over their moment holding the generational wealth, but to honor it.

Not only does this eliminate any ideas of absurd entitlement they may see around your request, but it might also help them see an early inheritance to you and your sister as a kind of collaboration — and the money as a family business. For now, they are co-CEOs and get to call the shots, but you, your sister, and your children are the future and worth the investment.

That said, I wouldn't shy away from reminding your dad that his parents did the same for him. I wouldn't make this reminder heavy-handed or accusatory. Instead, it should be a gentle way to introduce your request. Start by saying something like, "Hey, Dad. Remember how Grandma and Grandpa gave you part of your inheritance even while they were still living? I was thinking…"

You'll want to prepare a well-thought-out financial plan. Research investment options, savings accounts, and trusts, and determine how to maximize the financial gift you're requesting. Then, pitch this plan to your parents.

Whether your parents are holding onto the inheritance tightly because they still see you and your sister as fiscally irresponsible teenagers, because they have personal retirement concerns or priorities, or because they just didn't think you needed the money in the moment, presenting them with a plan is a great way to inspire their confidence and show them that giving you the money is not a risky indulgence, but a sound choice.

Your letter describes a lineage of security — not only the financial kind, but the kind that only happens when each generation looks after the next. While your parents may be playing with the timeline a bit, you mentioned having little doubt that they will leave the money to you and your sister when they die. This tells me your family looks out for one another. No matter how this conversation goes, take comfort in that security. That's the kind of wealth that can't be spent in a single generation, and you've got it. You lucky thing!

Rooting for you,

For Love & Money

An earlier version of this article was originally published in September 2024.

Looking for advice on how your savings, debt, or another financial challenge is affecting your relationships? Write to For Love & Money using this Google form.

"We will always protect Social Security, Medicare!" says President Donald Trump.

That would be nice.

But when I look at these programs' balance sheets, I don't see how he's protected anything. Both Social Security and Medicare are on track to run out of money.

Politicians mostly ignore the problem. Worse, progressives like Sen. Bernie Sanders (I–Vt.) and Rep. Alexandria Ocasio-Cortez (D–N.Y.) say they want to expand Social Security benefits.

That's just irresponsible.

My new video points out what we've known for years: These programs are unsustainable.

The problem is that people like me live longer. We like getting monthly Social Security checks and medical care that appears free.

Since we vote more consistently than others, politicians don't want to make us mad by cutting our handouts.

My fellow geezers say, "Social Security is not a handout! I contributed to the 'trust fund' every year. I'm just getting back what I paid in!"

But that's not true. Today, most of us get back much more than we paid in.

In 1935, politicians created the handout, saying, even if you don't save for retirement, government will save for you.

But that was another political lie. They didn't create individual retirement accounts. They didn't save our Social Security payments. They spend every penny as it comes in.

It's why Social Security is like a Ponzi scheme.

Bernard Madoff went to jail because he used new investors' money to pay old investors. That's exactly what our government does.

Few Americans realize it.

"What happens to the money?" I ask people on the street.

"It's held in trust," said one woman.

It isn't.

When politicians started Social Security, there were enough young workers to tax to cover the cost of sending checks to old people.

But now, since we live longer, there aren't enough young workers to fund our payments.

Social Security's costs exceed its income by billions of dollars.

"There is a plan out there to save it, but it requires some tough choices," says the Cato Institute's Romina Boccia. "Commonsense tweaks we can make."

Those include raising the retirement age, capping checks to the affluent, and letting young people opt out of Social Security. Reforms like that require tradeoffs. But ignoring the problem doesn't make it disappear.

We need to act, says Boccia, because Social Security is like the Titanic—gradually heading for disaster.

"Make reforms now," she says, "we can avoid the iceberg. [But] if we wait until the iceberg is in front of our noses and try to turn the ship, we're going to run right into it."

Medicare will hit its iceberg in 2033; then benefits will automatically be reduced. Social Security will hit it the year before.

At that point, incoming taxes will cover only about 78 percent of promised retirement benefits.

Yet irresponsible Democrats say: Spend even more.

"Human wants and needs are unlimited," replies Boccia. "There's always another program that needs more funding."

Sanders says, pay for it by taxing the rich more.

"There isn't enough money even that the rich would have, to pay for the…unfunded liabilities," Boccia points out.

If only politicians had listened years ago, when Cato and the Heritage Foundation proposed letting workers put some of their Social Security money into personal retirement accounts. Instead of relying on future taxpayers, workers could accumulate real assets that grow over time.

Personal accounts give workers something Social Security doesn't: assets we own.

"Even a conservative portfolio of stocks and bonds that got you a 5 percent annual return would have made you many times more [than Social Security]," says Boccia.

Private accounts helped Chile rise from one of the poorest countries in Latin America to one of the richest. Yet leftists still object to capitalists getting a cut of the pie.

"We lack gratitude for what the free market provides," says Boccia.

We should adjust these programs now.

The longer politicians wait, the worse the choices become.

But today's politicians will probably be gone by then.

Our children get the bill.

COPYRIGHT 2026 BY JFS PRODUCTIONS INC.

The post Social Security Is Like a Ponzi Scheme. How Do We Fix It? appeared first on Reason Magazine.

French economist Gabriel Zucman has come to California bearing a familiar French solution to a fiscal problem: another tax.

Once based at the University of California, Berkeley, Zucman is back and campaigning for Proposition 40, which would impose an allegedly one-time 5 percent tax on the net worth of Californians worth more than $1 billion. Zucman, who coauthored the proposition, estimates that the tax could raise about $100 billion and claims that 90 percent of the proceeds would go to health care.

The California Legislative Analyst's office is far more cautious, saying it would raise only "tens of billions" and could cause a long-term loss of income-tax revenue as wealthy people leave the state with the companies they created.

I've written plenty about why wealth taxes are economically destructive, administratively nightmarish, and unlikely to achieve anything close to what their advocates promise. But Zucman's prescription is wrong for a more fundamental reason, as his (and my) native country shows: Raising taxes to fuel ever-larger demands for government spending is a recipe for disaster.

Unless you've been living in a remote cave recently, you've likely seen all the protests and destruction in France. But do you know why it's happening?

As another economist, Paul Krugman, rightly noted back in 2017, "France offers a social safety net beyond the wildest dreams of U.S. progressives: guaranteed high-quality health care for all, generous paid leave for new parents, universal pre-K, and much more."

For decades, France has answered any perceived desire with government spending, then responded to the resulting fiscal problem by seeking new revenue sources. Today, French government spending consumes roughly 58 percent of gross domestic product (GDP).

Krugman gloated that France wasn't suffering social collapse and speculated that it was due to all the spending. He certainly can't say that anymore. In fact, he is now worried that France may be on the precipice of a debt crisis. The truth is that France hasn't done well for some time, even when Krugman cheered its spending.

One of the groups in the street today, young people, has faced widespread unemployment for a long time. The youth unemployment rate in France (ages 15-24) has hovered between 17 percent and 27 percent since 2000. In the second quarter of 2026, it was 21.6 percent, against 14.8 percent in the Eurozone and 9.9 percent in the U.S.

French people also pay some of the highest taxes in the developed world, and they're not happy with the return. The government already takes more than 52 percent of the country's output in revenue, runs deficits exceeding 5 percent of GDP, and has accumulated debt approaching 120 percent of GDP. Nonetheless, French students complain that the government is shortchanging schools, while everyone sees that it is shortchanging its army and police.

The students aren't wrong to feel left out. At The Two Cents Substack, Hoover Institution scholar Hanno Lustig calculates that, between 1995 and 2024, spending on social protection and health (most of which benefits older people) rose from 53.1 percent to 58.7 percent of all French government spending. The share devoted to education, defense, and public order fell from 15.2 percent to 13.7 percent. Transportation fell from 5.3 percent to 3.8 percent.

In other words, France has built an enormous welfare state, much of it devoted to older citizens, while letting other state capacities and basic services fall apart. As transfers of wealth swallow a larger share of the budget, everything else gets squeezed.

That is the fiscal ratchet Californians should worry about when Zucman tells them Proposition 40 is necessary to "save" health care. Proponents claim Washington "cut" Medicaid, but that language is misleading. California's deficit started long before any Washington spending reductions. Besides, federal Medicaid spending isn't falling—not even close. The Congressional Budget Office estimates it will reach $708 billion in 2026, 8 percent more than in 2025. What Washington did in the 2025 budget reconciliation law was reduce Medicaid's future growth relative to previous projections, partly by changing eligibility and enrollment rules and financing arrangements.

This is how the ratchet works. Once the government projects a spending increase, anything less becomes a cut. And once Washington fails to finance the entire projected increase, Californians are told that Sacramento must backfill the missing money. And how should it do that? Conveniently, by creating an entirely new tax.

France has run this experiment for decades. It has an incredibly generous welfare state paid for with very high taxes; it's even tried a wealth tax and has a value-added tax, yet somehow it's never enough. Its welfare state has not eliminated scarcity. It has merely transferred the job of rationing scarce resources to politicians.

Zucman looks at California and sees hundreds of billions of dollars of private wealth waiting to solve a public finance problem. Californians should look across the Atlantic and ask a different question: What happens after politicians decide that every spending adjustment can be delayed until tomorrow by finding another pot of private wealth?

France should not be sending California tax advice. It should be sending a warning.

COPYRIGHT 2026 CREATORS.COM

The post France Is a Warning to California's Tax-the-Rich Crowd appeared first on Reason Magazine.

A proposed "wealth tax" on California's billionaires could backfire and cost the state tens of billions of dollars in the long run.

If the proposed tax drives wealthier residents out of the state, California could end up losing between $1 billion and $3.5 billion annually in income taxes, according to a working paper published this week. A pair of researchers at Stanford University warn that the state could end up losing an estimated $39 billion because of the consequences of the wealth tax.

"These findings suggest that the Billionaire Tax Act will not fulfill the primary functions for which it was designed," write researchers Benjamin Jaros and Joshua Rauh.

Voters in California will decide next month whether to impose the one-time, 5 percent tax when they vote on Proposition 40. The ballot measure is dividing Democrats—Gov. Gavin Newsom opposes it, while progressive Rep. Ro Khanna (D–Calif.) claims it is the "most important ballot initiative in America and a fight for the soul of our party."

And it's already spurring some billionaires to flee the state—including venture capitalist Peter Thiel and Google co-founder Larry Page. Including those two, the seven billionaires who have publicly said they are leaving the state represent more than $539 billion of the nearly $1.9 trillion aggregate net worth of California's billionaires, the researchers note.

With other departures likely happening more quietly, the new study estimates that the tax will generate about $30 billion, a far cry from the $100 billion that the tax's supporters expect. The "behavioral response" from billionaires in California "has eroded most of the projected tax base," write Jaros and Rauh.

That's still a pretty big pot of revenue. In the long run, however, the state is likely to lose out.

After running 100,000 simulations using different assumptions, the two researchers report that "85 percent of plausible outcomes produce a negative" result in state revenue.

Other recent experiments with special taxes on wealth have backfired in similar ways. In response to a new wealth tax in Washington State, Jeff Bezos relocated to Florida, and iconic Seattle brand Starbucks shifted more of its corporate headquarters to Tennessee. Studies have shown that a "millionaires tax" in Massachusetts contributed to wealth moving out of that state.

Capital is always mobile, despite the best efforts of politicians. And if you were a billionaire living in California, why would you stick around?

Polls show voters are narrowly divided over Proposition 40. A Politico poll published earlier this month showed 46 percent of voters plan to vote for the measure, while 43 percent oppose it. Voters were similarly divided when asked if they expected it to pass or not.

The post California's 'Wealth Tax' Could Cost the State $39 Billion appeared first on Reason Magazine.

In this personal essay at The New Yorker, Anna Holmes writes about growing up in Davis, California, a college town near Sacramento; the financial challenges her mixed-race family faced; and what it means to come from a family without the generational wealth that can make homeownership, and the financial security that comes with it, possible.

It’s hard to hear people who own property grumble about how little money they have. One friend who regularly moans about money has a four-bedroom home on the West Coast and a vacation house in New England. I’m unmoved by the financial lamentations of another friend, who owns a town house in New York with an apartment for a nanny or an in-law. Stuff like this makes me want to scream. Demonstrate some modicum of self-awareness! Read the fucking room! When a friend told me that her parents were going to help her buy a second home, I made a pointed remark that it must be nice to have access to that sort of capital. She conceded the point, graciously, and we moved on.