Equal Tax Act
Rep. Ramirez Introduces Bill to Tax Capital Gains Like Regular Income for Millionaires
The Equal Tax Act was recently introduced in the House and is currently waiting for review by the House Committee on Ways and Means. No further actions are scheduled at this time. The bill is in the early stages of the legislative process.
Part of: story →Passage Likelihood
Legislative Progress
Key Points
- People earning over $1 million a year would lose their preferential tax rate on capital gains and dividends. Investment profits above that threshold would be taxed at the same rate as regular wages.
- Giving a valuable gift or passing away would trigger capital gains taxes on the increase in value of assets since they were bought. This ends the longstanding 'stepped-up basis' loophole that lets heirs avoid taxes on gains that built up during a deceased person's lifetime.
From policy text
“Any property which is transferred by gift or at death shall be treated as sold for its fair market value on the date of such gift or death.”
View in full text - Most families would be shielded from the new death-related capital gains tax because the first $1 million in gains is excluded from income entirely, and that amount adjusts for inflation each year. Transfers between spouses are also exempt.
- Family farms and small businesses that stay in the family get special treatment. Half of gains over $1 million are excluded as long as the heirs keep running the farm or business for at least 10 years.
From policy text
“in the case of property that is a qualifying family farm or business that meets the certification requirement of subsection (d), 50 percent of so much of any gain from a transfer described in paragraph (1) as exceeds $1,000,000”
View in full text - The popular 'like-kind exchange' tax break used by real estate investors would be capped. Investors could only defer up to $500,000 of gains per year and $1 million over a lifetime, unless the property is used for farming.
From policy text
“The amount of gain excluded from recognition under paragraph (1) with respect to any property of the taxpayer during the taxable year which is not qualified property shall not exceed $500,000.”
View in full text - The pass-through business income deduction (Section 199A) would be capped at $1 million of taxable income, limiting a tax break that currently benefits high-earning business owners with no income ceiling.
From policy text
“so much of the taxable income of the taxpayer for the taxable year as does not exceed $1,000,000”
View in full text
Impact Analysis
Personal Impact
Milestones
Referred to the House Committee on Ways and Means.
Introduced in House
The bill was officially filed and given a number. It now enters the legislative queue.
Related News
3 articlesSenator Markey Joins Push to Equalize Capital Gains and Income Tax Rates
Senator Edward Markey introduced a Senate version of the Equal Tax Act, targeting the 'buy, borrow, die' strategy. The bill would tax unrealized gains at death with a $1 million exemption, a move analysts say could significantly impact estate planning for high-net-worth individuals.
Ramirez introduces legislation to tax the rich
Congresswoman Delia Ramirez (D-IL) introduced the Equal Tax Act, which aims to ensure that millionaires and billionaires pay the same tax rates on investments as working families pay on wages. The bill includes a $1 million exemption for inherited gains to protect most families.
This Week in Tax Policy: Income Inequality and the Equal Tax Act
The Equal Tax Act, introduced by Senator Ed Markey, represents the latest Democratic attempt to reform capital gains. The bill limits preferential rates to those earning under $1 million and introduces deemed realization at death, with specific carve-outs for family farms.
Source Information
Document Type
Congressional Bill
Official Title
Equal Tax Act
Data Sources
Sponsor
Cosponsors
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