The Equal Tax Act ensures wealthy investors pay the same tax rate on their income that working people pay on their income, by taxing investment income at the same rate as earned income for earnings over $1 million annually. It eliminates one of the ways the wealthy avoid taxes by ending the stepped up basis loophole with unprecedented protections for family farms and businesses.
The Equal Tax Act
- Creates a tax code that treats income the same, regardless of source. Those making more than $1 million in investment income would pay the same tax rate as those who work for a paycheck.
- Closes the stepped-up basis loophole, which would disrupt the “buy, borrow, die” strategy used by billionaires to pay zero dollars in federal income tax even as their wealth soared.
Background
The unequal treatment of earned income and capital gains income is one central of the largest drivers of inequality in our tax code. It allows those who primarily earn money from already having wealth to continue to grow it with a much smaller tax obligation than those who earn money from working for a paycheck. A tax code that promotes inequality instead of constraining it is both the product of wealth inequality destabilizing our politics and democracy, and fuel for further destabilization.
Polls indicate 66% of voters support raising capital gains rates on the wealthy, consistent with years of polling indicating support for closing tax loopholes that benefit the wealthy (74%) and making millionaires and billionaires pay more in taxes (70%). This proposal delivers by raising significant revenue exclusively from households that have more than $1 million in annual income.
Timing
Patriotic Millionaires seeks to have this legislation introduced in both houses of Congress in fall of 2025, and plans to support the introduction with a significant media campaign.