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Bill

HR 5336

Equal Tax Act

119th Congress Introduced by Yassamin Ansari and 14 co-sponsors

The Equal Tax Act equalizes capital gains and earned income tax rates for high earners, protecting family businesses while ensuring fairer taxation for all.

Introduced in House
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WeVote Research Nonpartisan
Bill Summary · HR 5336

Summary of HR 5336 - Equal Tax Act

Bill Information:
- Bill Number: HR 5336
- Title: Equal Tax Act
- Status: Introduced in House
- Introduced: September 11, 2025
- Classification: Bill

Purpose and Intent

The Equal Tax Act aims to amend the Internal Revenue Code of 1986 to create parity in the taxation of capital gains and earned income. The bill seeks to address perceived inequities in the current tax system, where capital gains are often taxed at lower rates than ordinary income, thereby promoting a more equitable tax structure.

Key Provisions

1. Equalization of Tax Rates

  • The bill proposes to amend Section 1(h) of the Internal Revenue Code to limit preferential tax rates for capital gains to individuals with taxable incomes of $1,000,000 or less. This change aims to ensure that higher-income earners do not disproportionately benefit from lower capital gains tax rates.

2. Treatment of Family Farms and Businesses

  • The bill includes provisions that exempt gains from the transfer of qualifying family farms or businesses from the income calculation that determines eligibility for the preferential rates. This is intended to protect family-owned businesses from being adversely affected by the new tax structure.

3. Deemed Realization of Capital Gains

  • The bill introduces a new section that treats property transferred by gift or upon death as sold for its fair market value at the time of transfer. This means that capital gains taxes would be assessed at the time of transfer rather than deferred until the property is sold, impacting estate planning and inheritance strategies.

4. Exceptions and Special Rules

  • Certain exceptions apply, including transfers to spouses, charitable contributions, and specific types of personal property. The bill also outlines special rules for trusts to ensure compliance and prevent tax avoidance.

Affected Parties

  • Individuals and Families: The bill primarily impacts high-income earners who benefit from lower capital gains tax rates.
  • Family Businesses: Provisions are included to protect family-owned farms and businesses from adverse tax implications.
  • Estate Holders: Individuals planning their estates will need to consider the new rules regarding the taxation of property transferred at death.

Procedural Aspects

  • The bill was introduced in the House of Representatives and referred to the Committee on Ways and Means for further consideration.
  • The amendments proposed in this bill would take effect for taxable years beginning after December 31, 2025.

Conclusion

The Equal Tax Act represents a significant shift in the U.S. tax policy, aiming to create a fairer tax system by equalizing the treatment of capital gains and earned income. By targeting high-income earners and providing protections for family businesses, the bill seeks to address long-standing concerns about tax equity and fairness. As it moves through the legislative process, its implications for taxpayers and the economy will be closely monitored.

Compiled from official sources — confirm details with the bill’s official record.

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