Big Education Ape: REVIVE THE AMERICAN DREAM: A TAXING SITUATION

Wednesday, September 30, 2026

REVIVE THE AMERICAN DREAM: A TAXING SITUATION

The tax code has a favorite child, and it isn't the one who shows up for the 6 a.m. shift.

Remember when the American Dream meant working hard, saving up, and buying a house? Today it means working hard, saving up, and watching a private-equity fund buy the house first. The dream hasn't died of natural causes. It has been priced out of the market by a tax code that treats money that works (your paycheck) as a chump, and money that merely exists (a hedge fund's carried interest, a billionaire's stock portfolio) as royalty.

A nurse pays tax on every dollar of pay, withheld before she ever sees it. A billionaire's fortune can grow by tens of millions in a year without a single taxable event, because the law doesn't count gains until you "realize" them, and the wealthy have developed a remarkable talent for never doing so. The code values capital over labor, and it's time for Congress to fix it.

Here is your homework for your Congressman and Senators. It's a short list, and it comes with a deadline: the first Tuesday in November.

1. Stop Letting the Grim Reaper Wash the Tax Bill

Nothing in the tax code is more magical than death. Under the "step-up in basis," when someone inherits an asset, its value for tax purposes resets to today's market price. Decades of appreciation, on which nobody ever paid a dime, simply vanish. The heirs can sell the next morning, owing nothing on the gain. The rest of us can only dream of a tax bill that dies before we do.

End the step-up. Either tax unrealized gains at death or require heirs to carry over the original cost basis. Growth that accumulates for sixty years should be taxed at least once before the family yacht christening.
Lower the estate tax exemption. The federal exemption is now $15 million per person, which means $30 million for a couple before the government asks for a penny. The vast majority of American families will never meet the estate tax, and that is exactly why it should apply to the ones who do.
Close the GRAT loophole. Grantor Retained Annuity Trusts let wealthy families shift fast-growing assets out of their estates tax-free, using "zeroed-out" trusts engineered so the gift has a taxable value of roughly nothing. Set minimum terms for GRATs and the trick stops working.

2. Tax Wealth, Not Just Wages

Income tax only catches what flows: salary, dividends, stock you actually sold. It never touches the great reservoirs of wealth sitting quietly behind the dam. So we tax the flow, and the reservoir keeps getting deeper.

An annual wealth tax. A 1% to 3% levy on net worth above a very high threshold, say $50 million, would leave 99.9% of Americans untouched. If you'd have to check your net worth against a $50 million line, this doesn't apply to you. Congratulations, and please call your representative anyway.
A billionaire minimum tax on unrealized gains. If your paper gains in liquid assets run into the billions, you can pay an annual tax on them, the way homeowners pay property tax on a house they haven't sold.

3. Buy, Borrow, Die

This is the most elegant three-step in American finance:

Buy assets that appreciate.
Borrow against them at low interest to fund a magnificent lifestyle. Loan proceeds aren't income, so the tax bill is $0.
Die, at which point the step-up in basis erases the gain, the heirs repay the loan, and the tax collector goes home empty-handed.

Meanwhile, the teacher who takes out a loan to cover a car repair is just a person with a loan. The fix is simple:

Deemed realization on big loans. Treat loans secured by massive stock holdings above a threshold (say $10 million) as "constructive sales," triggering capital gains tax on the borrowed value.
A withholding tax on collateralized borrowing. Apply a flat prepayment tax on personal credit lines backed by private assets. Your paycheck already gets withholding, so this only extends the courtesy.

4. Charity Should Mean Charity

Giving to good causes is admirable, and the tax code rightly encourages it. But private foundations and Donor-Advised Funds (DAFs) have become a bit like a gym membership: the donor gets the credit for signing up and the funds never seem to show up at the actual work. A DAF gives the donor an immediate deduction, and then the money can sit for decades, growing, while the food banks and classrooms wait.

Set a payout deadline for DAFs. Require the money to reach working charities within 5 to 10 years. If the cause is urgent enough to deduct today, it's urgent enough to fund today.
Raise the private foundation payout requirement above 5%. More of the money should reach actual charitable operations.
Crack down on family-office behavior. Tax-exempt foundations shouldn't function as a salary-and-perks program for the founder's relatives on the board.

5. Close the Back Door to the Cayman Islands

The offshore lifestyle is legal, which is exactly the problem. Corporations book profits in jurisdictions where they have a mailbox and a filing cabinet but no employees. Wealthy individuals park yachts, real estate, and accounts inside opaque entities. And in 2025-26, Washington spent its energy making that easier.

Consider the last twelve months. In March 2025, FinCEN exempted every U.S.-formed company from the Corporate Transparency Act, which shrank the pool of companies required to name their real owners from roughly 32 million to under 12,000. Then in January 2026, the OECD agreed to a "side-by-side" deal exempting U.S.-headquartered multinationals from most of the global 15% minimum tax. That tax was designed so profits would have no tax-free island left to hide on. The rest of the world is going to tax its multinationals. Ours got a hall pass.

So the ask to your Congressman and Senators is no longer "join the world." It is "build our own."

Write a real U.S. minimum tax. The U.S. now relies on its own minimum tax rules (the successor to GILTI) to justify the exemption, so make them do the job. Close the gaps and raise the rate so U.S. multinationals pay at least what their European competitors do. If we want to be exempt from the global minimum, ours had better be a minimum.

Restore beneficial ownership reporting. The person who actually owns the penthouse, the LLC, and the shell company should have to be named to the government. FinCEN's own estimate shows the 2025 rule left almost none of the original filers. Ask Congress to write the requirement into statute, so a rule change can't wipe it out overnight.

Strengthen economic substance rules. Deny deductions for royalties and "management fees" paid to offshore subsidiaries that exist only on paper. If the subsidiary has no staff and no office, it has no business taking a deduction.

The pitch fits on a bumper sticker: If a company can't find a tax-free island, it shouldn't be able to build one.

The Bottom Line

None of this is radical. Every proposal above simply asks that wealth be treated like work. A tax code that values capital over labor produces an economy where inheriting a fortune beats earning one, and where a fifty-hour week can't buy a starter home. Fix the incentives, and the dream comes back into reach.

So call your Congressman. Call both Senators. Bring a list, and bring a friend. And in November, remember who answered.