Congress·In Committee·S. 4122

Sen. Markey and Sen. Sanders Introduce the Equal Tax Act to Tax Investment Gains Like Regular Income

Equal Tax Act

8 days ago·View on Congress.gov·Read full text

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Key Points

People earning over $1 million a year would lose their lower tax rates on investment income like stocks and dividends. Above that threshold, capital gains would be taxed at the same rates as regular wages and salary.
The bill would treat gifts and inheritances of appreciated property as if they were sold, triggering capital gains taxes at the time of the transfer. This closes the so-called "stepped-up basis" loophole that currently lets families avoid taxes on gains when someone dies.
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.”
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Most families are protected by a $1 million exclusion on gains from inherited property. Family farms and businesses get an extra break — 50% of gains above that threshold are excluded if heirs keep the operation running 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”
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Real estate investors face new caps on like-kind exchanges (Section 1031 swaps), which currently let them defer taxes indefinitely when trading properties. The new limits are $500,000 per year and $1 million over a lifetime.
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.”
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Wealthy families using trusts to shelter assets for generations would face a deemed sale every 30 years, forcing taxes on accumulated gains. Heirs who owe taxes at death can spread payments over up to 5 years at a reduced interest rate.
The qualified business income deduction (Section 199A) would be capped at $1 million in taxable income, reducing the tax break for high-earning business owners who currently benefit from a 20% deduction on pass-through income.
From policy text
“so much of the taxable income of the taxpayer for the taxable year as does not exceed $1,000,000”
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TaxesEconomy FinanceAgriculture

Impact Analysis

Personal Impact

Who is affectedScoreImpactCertaintyScopeDurationSentiment

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

2 milestones2 actions

Mar 17, 2026Senate

Read twice and referred to the Committee on Finance.

Mar 17, 2026

Introduced in Senate

What Happens Next

Projected impacts based on AI analysis

2027

IRS issues regulations for new reporting requirements on gifts and bequests

People giving or receiving substantial gifts or inheritances would need to report detailed information to the IRS, including property descriptions and fair market values. The IRS would need to create new forms and guidance.

Related News

3 articles

ScheerPost·7 days ago

Fortunes, Loopholes, and the Political Protection of Billionaire Wealth

The Equal Tax Act aims to raise $300 billion over a decade by taxing capital gains at ordinary rates for high earners. It closes the stepped-up basis loophole but includes specific protections for family farms and small businesses to ensure they can remain operational across generations.

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Radio Free·8 days ago

Patriotic Millionaires applaud Senator Markey's introduction of the Equal Tax Act

The Equal Tax Act would ensure that millionaires and billionaires pay the same tax rates on investment income as working people do on wages. The bill addresses the 'stepped-up basis' loophole, requiring taxes on asset appreciation when transferred as gifts or at death.

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The New Republic·9 months ago

The Rich Should Be Paying More—and Yes, That Means Me

The Equal Tax Act is highlighted as a key component of a broader legislative agenda to restore fairness. By taxing all income over $1 million at the same rate, the bill removes the preferential treatment currently given to capital gains over earned labor income.

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