The Ledger · Interactive

The Replacement Test

A question worth asking out loud: what if your wages weren't taxed at all — and wealth was taxed instead, including the fortunes borrowed against and never sold? We built the experiment and ran it with official numbers: Treasury receipts, Joint Committee on Taxation scores, the published estimates that Congress itself uses. We print the answer the arithmetic gives, whether it flatters our case or not. That is the only kind of advocacy worth your trust.

By Orion Quinn · Figures as of FY 2025–26

§ 01 — The dream, on your numbers

Start with what you make

Enter your salary. We'll show what the federal income tax takes from you today — the part that would vanish if work went untaxed. (Payroll tax is held aside throughout: it funds your Social Security and Medicare and stays in place in this experiment.)

Gross annual salary

$ / year

Your federal income tax today

—

Zero income tax keeps you

—

What the income tax raises nationally

$2,656B/yr

§ 02 — The wealth side of the ledger

Now switch on the taxes on wealth

Every lever below is a real, drafted proposal with a published revenue estimate — not our numbers, the scorers'. Behavioral responses (selling less, restructuring, avoidance) are already built into these scores; that is what scoring means. Flip them and watch the bar.

A 2% annual tax on wealth over $30 million ~$415B/yr

Source: Institute on Taxation & Economic Policy. Touches roughly 1 in 400 households (0.25%). The largest sustained wealth-side revenue with a published estimate.

Tax billionaires' investment gains every year, sold or not ~$56B/yr

Source: Joint Committee on Taxation score of Sen. Wyden's Billionaires Income Tax, ~$557B over a decade. Mark-to-market on ~700–800 taxpayers with $1B+ in assets or $100M+ in income.

Tax unrealized gains at death — end "stepped-up basis" ~$40B/yr

Source: Sen. Van Hollen's STEP Act estimate, ~$400B over a decade. Today, a lifetime of gains is erased for tax purposes the moment the owner dies. This is the "die" in buy-borrow-die — and per the Tax Policy Center, it is where the real money escapes.

Tax borrowing against investments ~$2B/yr

Sources: Bipartisan Policy Center / Tax Foundation modeling of an excise on securities-backed credit lines; Tax Policy Center. Read this lever carefully — it is the most instructive one on the page. The "borrow" in buy-borrow-die raises almost nothing directly, because the borrowing was never where the money is. Its purpose is to seal the deferral channel so the taxes above can't be sidestepped.

The replacement gauge

— — of the income tax replaced

Note: the wealth tax and mark-to-market reach the same fortunes, so running both slightly overstates the combined total. We flag it so you don't have to find out from a critic.

At this funding level, an across-the-board cut would return — a year to you — — off your income-tax bill.

The one-time catch-up, separate from the gauge

~$2.1 trillion, once

Households worth $100 million or more are sitting on roughly $8.5 trillion in gains that have never been taxed (Federal Reserve data, Americans for Tax Fairness analysis). A one-time 25% catch-up assessment on that stock would raise about ten months' worth of the entire federal income tax — once. Real money; not a substitute for an annual revenue source, which is why it sits outside the gauge.

§ 03 — The verdict

What the arithmetic says — printed in full

—

What the other side will say — and our answer

"Taxing unrealized gains is unconstitutional."

Genuinely unsettled. In Moore v. United States (2024), the Supreme Court upheld a tax reaching undistributed income but pointedly declined to rule on mark-to-market taxation of unrealized gains. Litigation is certain. That is an argument for careful drafting — gains-at-death and the estate-linked routes stand on far firmer constitutional ground than annual mark-to-market — not an argument that a lifetime of gains should escape tax forever.

"The rich will dodge it, so the real revenue will be lower."

Avoidance is real, which is exactly why we used official scores instead of advocacy math: JCT and Treasury build behavioral response into their estimates. The numbers on this page are the after-dodging numbers. If anything, that strengthens the page's central finding rather than weakening it.

"You can't value a private business or a painting every year."

Correct for annual mark-to-market on illiquid assets — one reason the Wyden plan limits it to ~700–800 taxpayers and uses lookback rules. Taxing gains at death avoids the problem almost entirely: estates already get appraised, on forms the wealthy already file.

"This punishes success and will crash investment."

The proposal on this page taxes wealth the way work has been taxed for a century. No one calls the income tax on a nurse's overtime a punishment for success. The empirical record on modest capital taxation and investment is contested in both directions; what is not contested is the current asymmetry — an 8% effective rate on billionaire income against a higher rate on the median paycheck.

Sources & the honest fine print

The hole: individual income tax receipts, $2,656.0 billion, FY2025 actual — U.S. Treasury, Combined Statement of Receipts.
Your income tax: 2025 IRS brackets, single filer, standard deduction, federal only; illustrative. Payroll tax (7.65%) excluded from the experiment on both sides — it funds Social Security and Medicare and is left untouched.
Wealth tax: ITEP, "The Geographic Distribution of Extreme Wealth in the U.S." — 2% on wealth over $30M ≈ $415B/yr.
Mark-to-market: JCT score of the Wyden Billionaires Income Tax, ~$557B/10yr.
Gains at death: Van Hollen STEP Act, ~$400B/10yr; Obama-era Treasury scored a narrower version at $210B/10yr.
Loans against assets: BPC/Tax Foundation analysis of a 1% excise on securities-backed lines of credit (2025); TPC analysis that borrowing is "a relatively small fraction" of ultra-wealthy gains — the escape happens at death, not at the bank.
The stock of untaxed gains: ~$50 trillion across all households (Tax Policy Center / McClelland, from the Federal Reserve's Survey of Consumer Finances + Forbes 400); ~$8.5 trillion held by households worth $100M+ (Americans for Tax Fairness, Fed data).
Billionaire 8% effective rate: White House Council of Economic Advisers / Treasury, 400 wealthiest families, 2010–18, income inclusive of unrealized gains.
What we do not claim: that these levers stack perfectly (the wealth tax and mark-to-market overlap, and we flag it); that scores a decade out are precise; or that the income tax can be replaced. The page exists to show it can't — and what can honestly be won instead.

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Civic journalism in the tradition of Mike Quin (1906–1947)
All contemporary writing bylined Orion Quinn