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
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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