But going after capital gains has always been politically tricky and hard to sell to the public.
“Republicans treat” the capital gains tax benefit “like it’s a tablet from Moses,” said Mark Mazur, director of the tax policy center and a senior Treasury official during the Obama administration. “But there’s nothing sacred about it.”
Democratic plans that target wealth that largely comes from capital gains functionally serve as the equivalent of a higher rate on those profits, according to Mark Bloomfield, president and chief executive officer of the American Council for Capital Formation, a lobby and research group.
Said Andrew Hayashi, a tax law expert at the University of Virginia School of Law: “The spirit of the moment is that people feel like capital income is under-taxed.”
The Democrats’ proposals, derided as “socialism” by President Donald Trump, are most likely to remain just campaign rallying cries unless a Democrat wins the White House in 2020 and the party gains control of both houses of Congress.
But calls to seize the wealth of the top 1 percent or fewer make for better campaign rallies than calls to raise the rate on capital gains, Mazur said.
‘Big Fortunes’
Gates, for what is believed to be the third time in a decade, said in a television interview last month that “the big fortunes, if your goal is to go after those, you have to take the capital gains tax, which is far lower at like 20 percent, and increase that.”
The revenue, he said, should be used to plug the budget deficit -- a different goal from Democrats, who want to use the revenue raised on federal health and child-care programs, among other things.
Political fights over capital gains aren’t new. But earlier battles focused directly on changing the rate itself, rather than targeting the fruits of those profits or indexing it for inflation -- an idea that Treasury Secretary Steven Mnuchin and Trump briefly floated last year.