It fixes a key driver behind extreme wealth inequality.
Taxing income derived from investment more lightly than income earned from working for a paycheck is not only unfair on its face, it’s one of the largest drivers of inequality in our tax code, allowing those who are already wealthy to pay a lower tax rate than those who are working. This two-tier system is both a product of and further fuel for the kinds of extreme wealth concentration that have threatened our democracy in 2025.

It will boost the economy over the long-term while lowering wealth inequality.
Recent analysis by the Institute for Macroeconomic & Policy Analysis (IMPA) out of American University finds that equalizing rates could boost the economy over the long-term and decrease inequality with no negative impact on economic efficiency. These findings are consistent with decades of historical evidence of rising capital gains rates being immediately followed by significant economic growth.

It eliminates one of the chief ways that the ultra-wealthy avoid taxation entirely.
Closing the stepped-up basis loophole directly disrupts the “buy, borrow, die” strategy used by centi-billionaires like Michael Bloomberg, Jeff Bezos, Elon Musk, George Soros, and Carl Icahn to pay zero dollars in federal income tax in recent years even as their wealth soared. 

It’s popular—even with Trump voters.
Polls indicate strong majorities support raising capital gains rates on the wealthy, consistent with years of polling indicating support for closing tax loopholes that benefit the wealthy and making millionaires and billionaires pay more in taxes.

It encourages productive investment over tax shelters designed to turn ordinary income into capital gains.
As the nonpartisan Tax Policy Center notes, lower tax rates on capital gains encourage using financial techniques to transform ordinary income to capital gains for top bracket taxpayers, using significant resources to design and implement these tax saving techniques that would be better used on productive investments. With the ETA, wealthy investors will be motivated purely by investment growth potential instead of potential tax benefits, and disincentivized from hoarding assets in order to pass on tax free.

It raises significant revenue exclusively from households that have more than $1 million in annual income.
When President Biden first proposed this reform in 2021, OMB predicted that it would raise more than $322 billion over ten years (pg 52). Following passage of the Trump megabill in 2025, the ETA would almost certainly raise far money—and only from those taxpayers with over $1 million in annual income.