Democrats Renew Push to Tax Wealthy Americans in Congress

Democrats are preparing an expanded federal tax agenda targeting billionaires, wealthy investors and large corporations after their victories in the 2026 midterm elections. The proposals, which could receive attention in the 120th Congress beginning January 3, 2027, include higher taxes on investment profits, large trusts and wealth accumulated through borrowing against stocks.

Sen. Ron Wyden, D-Ore., is expected to regain leadership of the Senate Committee on Finance, placing him in a central position to advance Democratic tax priorities. However, Republican control of the White House means President Donald Trump retains veto power over legislation he opposes.

In a Wednesday morning statement, Wyden outlined the committee's priorities for addressing wealth inequality and tax enforcement.

"On taxes, the committee will redouble its efforts to ensure billionaires pay their fair share and hold tax cheats accountable. Democrats will spearhead a tax agenda that puts American families first and requires the ultra-rich and corporations to pay their fair share," Wyden said.

Tax experts told CNBC that the proposals face significant legislative obstacles because Democrats lack sufficient congressional support to override a presidential veto. Nevertheless, the measures could establish policy priorities for a future administration.

Justin Miller, partner and national director of wealth planning at Evercore Wealth Management, said the proposals could provide an indication of future legislative priorities.

"The proposals are not necessarily anything that will pass over the next two years. But if there is an administration change two years from now, they do give you an indication of what might be on the table during the next administration," Miller said.

Three measures already before the Senate Finance Committee illustrate the proposed changes to federal taxation.

The Ending the Carried Interest Loophole Act, introduced in April by Wyden and Sen. Angus King, I-Maine, would eliminate preferential tax treatment for certain investment fund profits. Under existing law, fund managers can qualify for lower long-term capital gains rates when investments are held for at least three years.

The legislation would instead tax those profits as ordinary income and require managers to recognize certain deemed compensation annually, preventing them from deferring taxes until funds generate realized income.

Joshua Odintz, a partner at Holland & Knight and former Treasury Department and Senate Finance Committee tax counsel, said lawmakers from both parties had discussed changing carried-interest taxation for nearly two decades.

President Trump also criticized the tax provision during his 2016 presidential campaign, calling it "unfair to American workers." Odintz expects renewed scrutiny as lawmakers consider the financial outlook of Social Security, whose reserves are projected to run out by the end of 2032.

Odintz believes lawmakers are more likely to eliminate the tax preference through broader budget legislation than through an independent bill.

"I think an issue like carried interest have to be addressed in the context of a larger tax bill, where it's challenging for members to say, 'No, I'm going to stand up just on this one issue and crater a bill,'" Odintz said. "It's much easier when there are a series of trade-offs, and members can point to the different trade-offs and say, 'Look, I got this. I guess I had to give up that, but on net, this is better for my jurisdiction.'"

Another proposal, the Fair Trusts for Fiscal Responsibility Act, introduced by Sen. Patty Murray, D-Wash., would impose graduated annual taxes on trust assets exceeding $50 million. The proposed rate would reach 3% for assets valued above $1 billion.

The legislation would also establish a credit system allowing annual payments to be applied against future estate or generation-skipping transfer taxes. Unused credits could be refunded when applicable estate taxes are calculated.

David Blum, partner and chair of Akerman's national tax practice group, said the measure could significantly affect estate planning for wealthy families if lawmakers advance it. Miller questioned whether its complicated implementation would make passage difficult, pointing instead to periodic trust taxation systems used in the United Kingdom and Canada.

A third proposal, the Redistribution Of Billions by Instituting New High-income Obligations on Overlooked Debt (ROBINHOOD) Act of 2026, was introduced by Sen. Ruben Gallego, D-Ariz., in June. It targets the strategy commonly described as "buy, borrow, die," through which wealthy investors borrow against appreciated shares instead of selling them and triggering capital gains taxes.

Under this approach, heirs may receive inherited assets with a stepped-up tax basis, potentially eliminating capital gains liabilities accumulated during the original owner's lifetime. The legislation would require certain ultrawealthy borrowers to pay capital gains taxes on selected long-term assets used as collateral.

Beyond these three measures, the Tax Foundation identified several broader Democratic priorities for 2027. They include restoring expanded health insurance premium tax credits, increasing the child tax credit and earned income tax credit, and raising taxes on high-income individuals and corporations.

Other proposals include increasing the federal corporate tax rate from 21%, introducing higher taxes on millionaires, revisiting international corporate tax rules and changing the treatment of inherited capital gains.

The broader agenda also includes proposals addressing data center investment, artificial intelligence infrastructure and electricity consumption. The Tax Foundation cautioned that higher taxes could affect saving, investment and long-term economic growth.