How Tax Policy Created the 1%

Abolishing the tax break for capital gains would destroy a key mechanism of inequality and financialization. And a strike against this preference would force a reconsideration of the ideological predilections deeply embedded in our economic policies—such as the tax code—that continue to sustain neoliberalism in a post-Brexit, Trumpian world. The equalization of tax rates on different forms of income might seem like a top-down, technocratic liberal fix. But in fact, it would radically reorient the U.S. tax code according to a simple democratic principle: everyone's income counts the same. For nearly a century, the tax code's preference for investment gains has enjoyed the support of shifting and often surprising coalitions. And for nearly a century, the tax break for capital gains has persisted because it advanced the accumulation of white wealth.