This Proposal Doesn’t Ban Tax Deferral for the Ultrarich. It Just Makes Waiting Worthless

Buy a stock, watch it climb, and do nothing. That single move, repeated across decades, is how a great deal of American wealth escapes tax altogether. The gain isn’t income until you sell, and if you never sell, the government never collects. Die holding it, and the whole run-up simply vanishes from the ledger, handed to your heirs as if it had appreciated overnight.

This is the loophole at the centre of a recent Roosevelt Institute report, and it’s not a small one. The top 0.1 percent of Americans, roughly 340,000 people, now hold “$1 in every $6 of private US wealth,” about $23 trillion, and a fair chunk of that has never met a tax bill.

The report, written by UC Berkeley Law professor Brian Galle, is called How to Tax the Ultrarich, and its ambitions are clear in the title. What’s more interesting is the machinery. Galle proposes something he labels the Fair Share Tax, or FAST, and its cleverness lies less in how much it takes than in when. Timing, it turns out, is the whole game.

Because the very rich rarely need to sell. They can borrow against their holdings, live comfortably on the loans, and let the underlying assets compound untouched.

Traditional fixes have tended to break on two rocks. A straight wealth tax means valuing everything a person owns, every year, including stakes in companies that never trade on any market, which is a nightmare to administer and easy to game. And it may well be unconstitutional in the wake of Moore v. United States, the 2024 Supreme Court decision that left the taxation of unrealised gains looking legally shaky. FAST tries to slip between both.

Letting the Meter Run

The trick is to make deferral pointless rather than illegal. Under FAST, you still owe nothing until you sell. But when you do sell, the bill is calculated as though you had been paying an annual tax all along, with interest that grows at the asset’s own rate of return. Hold longer, and the meter simply runs faster. There is, in the report’s phrase, “no reward for delay.”

Work through the numbers and the elegance shows. Take an investor already past the plan’s $15 million lifetime exemption who buys $100 million of stock; it drifts up to $120 million after a year (no sale, no tax), then to $150 million, at which point they cash out. At a 23.8 percent rate, FAST asks for roughly $13.8 million, about $12.8 million in tax plus a million in interest. Under today’s rules that same sale triggers $11.9 million. The gap is the point: it is precisely what the deferral was worth, clawed back, so that patience gets the investor nothing.

The same logic reaches past death, which is where a lot of the real money hides. Right now, a quirk called basis step-up means an asset’s taxable history is wiped clean when its owner dies; decades of appreciation evaporate for tax purposes. Pair that with dynasty trusts, vehicles engineered to slide fortunes down the generations while dodging estate and generation-skipping taxes, and you get what Galle calls “dynastic wealth,” large inherited private empires that compound in the dark. FAST lets the liability ride with the asset instead of resetting it. In the report’s formulation, “death is not a tax eraser.”

None of this comes from a neutral referee. The Roosevelt Institute is a progressive think tank, heir to the Franklin and Eleanor Roosevelt legacy, and it makes no secret of wanting the ultrarich to pay more. Critics of plans in this family tend to raise familiar objections: that taxing gains at the internal rate of return could still bite during downturns, that the wealthy will find fresh work-arounds, that heavier taxes on capital may dull investment. Galle’s design answers some of these more squarely than others, and the constitutional question in particular remains open until a court weighs in.

A Tax Shaped for the Courtroom

Still, what makes FAST worth a second look is how deliberately it’s built for the legal fight ahead. By taxing only realised income, money that actually changes hands (rather than levying an annual charge on property a person merely holds) it aims to stay on the safe side of Moore. The report bills it as a “tax for our constitutional and political moment,” which is marketing, but not empty marketing. Whether it can deliver on “making the ultrarich pay on the growth of their fortunes” depends on politics no economist controls. The mechanism, at least, is the most serious answer yet to a question the country has spent a decade fumbling: how do you tax a fortune that never moves?

Frequently Asked Questions

What is the Fair Share Tax (FAST)?

The Fair Share Tax, or FAST, is a proposal from the Roosevelt Institute to tax the investment gains of the ultrarich. It applies to households with more than $15 million in lifetime investment gains and collects tax only when assets are sold, but calculates the bill so that delaying a sale gives no tax advantage.

Why doesn’t FAST just tax wealth directly every year?

FAST avoids an annual wealth tax because such taxes are hard to administer and may be unconstitutional after the 2024 Supreme Court decision in Moore v. United States. By taxing only realised income when assets change hands, FAST is designed to survive legal challenge while still reaching gains that would otherwise escape tax.

How does FAST stop the wealthy from avoiding tax by never selling?

FAST stops deferral from paying off by charging interest on the deferred tax at the asset’s own rate of return. The longer an owner waits, the larger the eventual bill grows, so holding an asset indefinitely no longer shrinks what is owed.

Is the Roosevelt Institute a neutral source on this?

No. The Roosevelt Institute is a progressive think tank that openly advocates for higher taxes on extreme wealth, so its report is an argument rather than a neutral analysis. It is regarded as factually reliable, but readers should weigh the proposal against objections that heavier capital taxes could affect investment or invite new avoidance strategies.