Tax the rich — properly.
The problem was never that top rates are too low on paper. It's that the biggest fortunes barely touch the income tax at all — by design.
A person who works for a living pays up to 37% on their wages. A person who lives off wealth pays 23.8% on the gains they cash in — and the very richest often pay far less than that, because the gains they never cash in aren't taxed at all. They borrow against their holdings to live, deduct the interest, and pass the assets to heirs at a “stepped-up” basis that erases the gain forever. That isn't evasion; it's the law. Fixing it is the cleanest revenue in the plan — you're not inventing a new tax so much as closing the exits from the one we have.
What this page argues
The United States taxes work harder than it taxes wealth. Wages face rates up to 37%; long-term capital gains top out at 23.8%; and the largest fortunes escape even that, because gains that are never sold are never taxed — and are wiped clean at death by the stepped-up basis. The goal here is parity, not a punitive headline rate: tax income from capital like income from work, and stop letting the biggest gains slip through untaxed entirely.
Concretely: tax long-term gains for the very wealthy at ordinary rates, end the stepped-up basis at death (or mark large fortunes to market), treat borrowing against mega-holdings as the realization event it functionally is, close the carried-interest loophole, and fund the IRS to collect what's already owed. Most of this is closing exits, not raising the marquee rate on anyone who works for a paycheck.
The same investigation, restaged one beat at a time. Step through it here, or present it fullscreen.
Tax the rich — properly.
The problem was never the headline rate. It's that the biggest fortunes barely touch the income tax at all — by design. Fixing it is closing exits, not inventing a new tax.
The record, claim by claim
Capital income is taxed lighter than work: top wages face 37%, long-term capital gains top out at 23.8%.
FACTUnder current law the top marginal rate on ordinary income (wages, salary) is 37%, while the top rate on long-term capital gains and qualified dividends is 20% plus the 3.8% net investment income tax — 23.8% all in. Someone who lives off appreciated assets is taxed at a materially lower rate than someone who earns the same amount by working. That gap is a deliberate feature of the code, not an accident.
- Internal Revenue Code — top ordinary rate 37%; top long-term capital-gains rate 20% + 3.8% NIIT = 23.8%
'Buy, borrow, die': the largest fortunes grow untaxed because unrealized gains aren't income and the stepped-up basis erases them at death.
FACTGains on assets you hold are not taxed until you sell ('realization'). The wealthy therefore don't sell — they borrow against appreciated holdings to fund their lives, since loan proceeds aren't income. When they die, the heirs inherit at a 'stepped-up' basis equal to current market value, so the lifetime of gains is never taxed at all. Each piece — realization, tax-free borrowing, stepped-up basis at death (IRC §1014) — is black-letter law. Together they let the biggest fortunes compound across a lifetime and a generation while touching the income tax barely or not at all.
- Internal Revenue Code §1014 (stepped-up basis at death); the realization requirement; borrowing proceeds are not taxable income
As a result, many of the very wealthiest pay a low effective rate on their true economic gains.
PROBABLY TRUEProPublica's 2021 'Secret IRS Files' — built from leaked IRS records for the wealthiest Americans — found that measured against how much their wealth grew, the 25 richest paid a 'true tax rate' of roughly 3–4% over 2014–2018, and several paid zero federal income tax in individual years. We grade this PROBABLY TRUE rather than FACT because the 'true tax rate' (tax paid against wealth growth) is a chosen metric — under current law unrealized gains aren't income, so it's a normative benchmark, not the legal one. But the underlying facts are solid: in specific years, some of the richest people in the country legally owed little or no federal income tax.
- ProPublica, 'The Secret IRS Files' (2021) — leaked IRS data on the effective/'true' tax rates of the wealthiest Americans
Top marginal rates were far higher for decades — through periods of strong growth — without the economy collapsing.
FACTThe top statutory income-tax rate was 91% in the 1950s and early 1960s and 70% until 1981, spanning some of the strongest growth decades in US history. The honest caveat: effective rates were lower than those headline figures because of the loopholes of the era, so this isn't an argument to restore 91% — it's a rebuttal to the claim that high top rates are inherently incompatible with prosperity. They demonstrably weren't.
- Tax Policy Center; IRS historical rate tables — top statutory rates of 91% (1950s) and 70% (through 1980); effective rates lower due to era loopholes
The carried-interest loophole lets private-equity and hedge-fund managers pay the low capital-gains rate on what is functionally their pay.
FACTFund managers' compensation — the 'carried interest' share of investment profits — is taxed as long-term capital gains rather than ordinary income, so labor income earned managing other people's money is taxed at 23.8% instead of up to 37%. Both parties have promised to close it for years; it remains open. It's a small-dollar item next to stepped-up basis, but it's the clearest single illustration of the code privileging capital over work.
- Internal Revenue Code — carried-interest treatment; Joint Committee on Taxation scoring of proposals to close it
The counter-cases, and why they fall short
- “Tax them and they'll leave, or stop investing.” Flawed: studies of actual millionaire migration (Young & Varner; the low domestic response to state-level top-rate changes) find the rich are far less mobile than the threat implies — their businesses, families, and networks are rooted. And the design here leans on closing loopholes and collecting taxes already owed, which changes no headline rate at all. Real at the extreme margins; wildly overstated as a veto.
- “Wealth taxes don't work — look at Europe.” This one has real force, and we grant it: the number of OECD countries with a net wealth tax fell from around a dozen in 1990 to a handful today, undone by valuation difficulty, capital flight, and thin revenue. But it argues for the right instrument, not inaction. The fix here is mostly inside the income tax — end stepped-up basis, tax large gains as ordinary income, treat borrowing against mega-holdings as realization — which is administratively easier and on firmer legal ground than a standalone wealth levy.
- “It's class warfare / punishing success.” Flawed: parity isn't punishment. The current code already puts a thumb on the scale — for capital and against work. Taxing a dollar of investment gain like a dollar of wages removes a distortion; it doesn't create one.
Where the evidence is strong, and where it stops
- The mechanics are hard fact; the “true rate” is a chosen lens. That capital is taxed lighter than work, and that stepped-up basis erases gains at death, is black-letter code. The eye- popping “3.4% true tax rate” figure depends on counting unrealized gains as income — a reform benchmark, not today's law. We keep those separate.
- Revenue estimates carry behavior. How much any of these raise depends on how people respond — realization timing, avoidance, migration at the margin. We name the direction confidently and treat the dollar figures as ranges, not promises.
- The Constitution is a live question. Whether Congress can tax unrealized gains was circled but not settled by the Supreme Court in Moore v. United States (2024). That's exactly why the plan leans on realization-based fixes (stepped-up basis, borrowing-as- realization, rate parity) that sit on firmer ground than a pure wealth tax.
The fairest dollar of revenue in the plan
Every priority in the Pragmatic Policy plan has to be paid for, and the revenue spoke argues the money is available without touching most people. This is where the biggest, fairest piece of it sits: taxing income from wealth like income from work. And it connects to the demand-side case in the velocity of money — a dollar left compounding untaxed in an asset portfolio does far less for the real economy than the same dollar recirculating through working households.
Questions worth taking seriously
Isn't taxing unrealized gains unfair or unworkable?
For ordinary savers, yes — which is why no serious version applies to them. The targeted fixes hit the specific trick the ultra-wealthy use: borrowing against giant holdings to live tax-free and passing them on at a stepped-up basis. Treating that borrowing as a realization event, or ending the death-time step-up, taxes gains that are being actively used as cash — not a paper house's paper value.
Didn't we try high taxes on the rich and it failed?
The US had top rates of 70–91% through its strongest growth decades, so “high top rates kill growth” doesn't survive the record. What has a mixed record is the specific instrument of a standalone European-style wealth tax — which is why this plan works mostly inside the income tax instead. Different tool, firmer ground.
If you are named on this page
If you are named on this page, or are a party materially affected by the claims made here, and you wish to respond, correct the record, or add context, use the Contact page. Responses are published verbatim alongside the original claim, with the sender identified and the date of receipt. The channel stays open for the life of the page.
This site aggregates and grades a record that other outlets and primary sources have already put on the record. Every FACT-graded claim above is sourced to court filings, government reports, sworn whistleblower disclosures, published investigative journalism, or named-source statements. The citations are the accountability mechanism; this section is how you get on the record too.
The record
- Internal Revenue Code — top ordinary rate (37%) vs. long-term capital gains (20% + 3.8% NIIT); §1014 stepped-up basis; realization; carried-interest treatment
- ProPublica, “The Secret IRS Files” (2021) — leaked IRS data on the effective/“true” tax rates of the wealthiest Americans
- Tax Policy Center & IRS historical tables — top statutory rates of 91% (1950s) and 70% (through 1980), and the gap between statutory and effective rates
- Young & Varner and related work on millionaire migration — the limited real-world mobility response to top-rate changes
- OECD — the decline of net wealth taxes (from ~12 countries in 1990 to a handful today)
- Moore v. United States (U.S. Supreme Court, 2024) — the unresolved constitutional question on taxing unrealized gains
- This plan's fiscal & revenue spoke — the broader revenue-over-austerity case