Problem
Preferential capital-gains rates, stepped-up basis, and aggressive avoidance let ultra-wealthy households pay lower effective rates than many wage earners. Underfunded IRS enforcement against high-income evasion shifts burdens onto workers.
Proposed Fix
Raise top marginal rates on income over $10M. Tax capital gains as ordinary income above $1M. End stepped-up basis for estates over $5M. Close carried-interest loophole. Fund IRS enforcement focused on high-income and large-partnership audits. Millionaire surtax dedicated to Social Security and Medicaid.
Economic Impact
Hundreds of billions in additional revenue over a decade from rate alignment and enforcement. Reduced inequality lowers social-insurance stress and funds infrastructure without cutting benefits.
Cost of Inaction
Leaving capital-income loopholes open shifts tax burden onto wages and underfunds Social Security, Medicare, and infrastructure that businesses also use. Treasury and IRS SOI data document the effective-rate gap at the top.
Safeguards
- No tax increases on income under $400,000
- Public IRS audit-rate dashboards by income bracket
- Anti-inversion and country-by-country reporting for multinationals
- Independent Tax Fairness Commission reporting every Congress
Opposition framing
Why they fight it
They fight loophole closure because stepped-up basis, carried interest, and offshore shelters are how dynastic wealth skips wage-worker tax rates.
What they're hiding
IRS and Treasury analyses show the very richest underreport at higher rates when audit capacity is cut. Effective rates on wealth and capital gains often undercut rates paid by teachers and nurses (CBO; documented audit disparities).
The gaslight
They scream 'class warfare' at arithmetic. Asking capital to pay closer to wage-worker rates is framed as punishment so the loophole architecture stays invisible.
The real reason
Billionaires, private-equity partners, and multinational tax departments design the rules. OpenSecrets tax and finance lobbying is the defense budget for inequality. The BIG reason is keeping the effective rate near zero on fortunes.
Evidence & framing
Aligning capital and wage tax rates reduces gaming and funds public goods businesses also use. Targeted IRS capacity recovers revenue that already belongs under current law.
Related Legislation
- Congress.gov - Tax fairness legislation
Track capital-gains and carried-interest reform bills
Implementation Timeline
- Enforcement firstYear 1
Restore IRS high-income audit capacity; close carried interest.
- Rate alignmentYear 1-2
Tax capital gains as ordinary income above $1M; raise top brackets over $10M.
- Estate basis reformYear 2-4
End stepped-up basis above $5M with small-business and farm continuity rules.
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