In their recent New York Times article, economists Emmanuel Saez of the University of California, Berkeley and Gabriel Zucman of the Paris School of Economics argued in favor of California’s Billionaire Tax Act. The proposed tax will apply to any state resident with a net worth over $1 billion. However, the primary target appears to be the tech billionaire class.

Many of California’s tech billionaires are known to receive only token salaries, with the bulk of their compensation coming in the form of company stock awards. To pay for their living expenses, these technopreneurs reportedly pledge their stock holdings as collateral for low-interest loans, on which they pay no taxes.

Under current law, when stock holdings are passed on to heirs, the cost basis, which is the price at which a stock was originally awarded or purchased, is reset to its fair market value on the date of the original owner’s death. This basis step-up is one of the most contentious issues in the debate about wealth inequality in America today.

What people are most unhappy about is technopreneurs holding on tightly to their accumulated stocks, and later passing them on to heirs who will not owe capital gains taxes due to basis step-up. By borrowing against assets to fund current consumption, and repeatedly getting step-ups in basis on future transfers, some wealthy families can essentially avoid paying both income and capital gains taxes in perpetuity. That is one of the things Saez and Zucman point to when they advocate for wealth taxes.

While many of the arguments in Saez and Zucman’s article were straightforward, I was a bit perplexed by a couple of things they said.

About Meta CEO Mark Zuckerbg, they wrote: “Since 2019, Meta has made hundreds of billions of dollars in profit. As Meta’s chief executive, Mr. Zuckerberg has invested much of that money back into the company, of which he owns about 13 percent. Their reinvestment has boosted the company’s value and, therefore, the value of its shares. This caused Mr. Zuckerberg’s wealth to rise by tens of billions of dollars.”

In another paragraph, Saez and Zucman said, “The same is true of the wealth Mr. Zuckerberg accumulated as Meta grew and investors became more bullish about the company. This dynamic increased the value of his shares by an additional $142 billion.”

My confusion stemmed from Saez and Zucman’s apparent argument against a foundational principle of business economics. When companies reinvest profits to expand their operations, they are able to hire more workers, who then gain the income they need to support their families. That has positive multiplier effects throughout local and regional economies. Shouldn’t we applaud Zuckerberg’s reinvestment of profits into Meta then, if that helps the company grow? And why should we be annoyed if a side effect of that is he becomes richer?

The rise in the value of Meta shares that boosted Zuckerberg’s wealth also made millions of small investors wealthier by increasing the balances in their 401K accounts. If investor bullishness increased the value of Zuckerberg’s shares by an additional $142 billion, as Saez and Zucman estimate, then, in aggregate, ordinary investors in the company made approximately $950 billion extra by simply riding his coattails. I see that as a pretty good deal for those mere mortals who have shares in Meta.

Perhaps it could be argued that if Zuckerberg sold some of his holdings to other investors, that would allow us to tax him, while still leaving outstanding Meta shares the same. But the tax bite would reduce Meta’s enterprise value in the short term. We would need a separate calculation to determine which option leaves us better off overall—taking the tax dollars now, or letting Meta continue to grow. The latter choice could very well yield society a slice of a much larger pie at a future date.

Corporate leaders frequently make this case for lower taxes. They want governments to take as little of their companies’ profits as possible so they will have the resources they need to expand their businesses. That argument can be both valid and self-serving. But in Meta’s case, because it operates in a high-growth industry, it may well be optimal to allow the reinvestment and have the additional $950 billion accrue to us. Society might come out ahead with the taxes the rest of us end up paying on that huge pile of extra cash.

Because governments at all levels need recurring revenues to fund their operations, they sometimes have no choice but to levy taxes immediately. However, this doesn’t negate the fact that deferring taxation to promote economic growth may be the optimal choice in some cases. Such deferment of taxes often entails either the postponement of consumption or the use of cost-efficient borrowing.

One problem is that not everyone owns a stake in financial markets. There are many people who feel left out of the Wall Street party that has been going on these past few years. Perhaps one way to address that issue is to find ways to help even the poorest members of society acquire shares in corporate America. But even without that, I still think we are all better off when people like Zuckerberg do well.

I am not an economist so I’m not entirely sure my thinking on this is correct. But I find the question intriguing. Assuming my math is correct, we have a choice to make. Should we try to tax Mr. Zuckerberg now and use the proceeds for our current needs, or wait to receive another $950 billion, or perhaps even more, at a future date?