Pragmatic Policy · Investigation · Policy
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.
FACT
§2 · Thesis
Parity, not punishment: tax income from capital like income from work, and stop letting the largest gains escape untaxed entirely.
End stepped-up basis, tax big gains as ordinary income, treat borrowing against mega-holdings as realization, close carried interest, fund the IRS.
§6 · Record vs Narrative
Work is taxed harder than wealth.
A dollar of wages
- Taxed up to 37% (top ordinary rate).
- Withheld every paycheck.
- No deferral, no escape hatch.
A dollar of capital gain
- Taxed 23.8% (20% + 3.8% NIIT) — if sold.
- Untaxed while unrealized.
- Wiped at death by stepped-up basis.
§5 · Graded Claim
'Buy, borrow, die': unrealized gains aren't income, borrowing against them isn't income, and death erases the gain (stepped-up basis, IRC §1014).
FACT
Each piece is black-letter law; together they let the biggest fortunes compound across a lifetime and a generation while barely touching the income tax.
§5 · Graded Claim
Measured against how much their wealth grew, the very richest paid a low 'true tax rate' — several paid zero income tax in individual years.
PROBABLY TRUE
ProPublica's 2021 'Secret IRS Files' (leaked IRS data): a ~3–4% 'true rate' for the top 25, 2014–18. PROBABLY TRUE — the metric counts unrealized gains as income (a reform benchmark, not current law); the zero-tax years are hard fact.
§5 · Graded Claim
Top rates were 70–91% through some of the strongest growth decades in US history — high top rates aren't incompatible with prosperity.
FACT
91% in the 1950s, 70% until 1981 (Tax Policy Center / IRS tables). Honest caveat: effective rates ran lower thanks to era loopholes — so this rebuts 'high rates kill growth,' it doesn't argue for restoring 91%.
§6 · Record vs Narrative
Competing theories, rebutted.
The counter-cases
- 'Tax them and they'll flee / stop investing.'
- 'Wealth taxes don't work — see Europe.'
- 'Class warfare / punishing success.'
Why each falls short
- Millionaire-migration studies find them far less mobile than claimed.
- Granted — so fix it inside the income tax, not a standalone levy.
- Parity removes a distortion; the code already favors capital.
Declassified
Honest limits: the eye-popping 'true tax rate' counts unrealized gains as income (a reform benchmark), and taxing those gains directly is a live constitutional question (Moore v. US, 2024).
§7 · Why it matters now
The fairest dollar of revenue in the plan.
This is the biggest, fairest piece of the revenue case — taxing income from wealth like income from work. It pairs with the velocity-of-money spoke on the demand side: a dollar compounding untaxed in an asset portfolio does far less for the real economy than the same dollar recirculating through working households.
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▦ Ledger gaps
Help us fill these lines.
- OpenThe constitutional reach of taxing unrealized gains (Moore left it open).
- OpenBehavioral response — how much each fix actually raises depends on realization timing and avoidance.
Help fill these →