Progressive organizations and activists have long called for higher taxes on investment income, framing it as independent, common sense policy solutions. A recent report from the Tax Foundation has modeled these plans and provided a wake-up call for policymakers about the effects they would have on American workers and the economy.
The Private Equity Stakeholder Project (PESP) co-authored a February 2025 report with Americans for Tax Fairness and Americans for Financial Reform calling for taxing carried interest at ordinary income tax rates, eliminating business interest deductibility, and expanding the Net Investment Income Tax. Pinpoint has documented PESP’s funding from liberal organizations including the Ford Foundation, Rockefeller Foundation, and Omidyar Network.
Patriotic Millionaires, a Democratic-aligned advocacy group, has pushed the same positions through their proposed Equal Tax Act, which would tax capital gains at ordinary income rates for earners above $1 million, and eliminate the step-up in basis. The plan is supported by Democratic Senators Van Hollen (D-MD), Kelly (D-AZ), and Gillibrand (D-NY).
And then there’s the Delta Fund, a Bellevue, Washington donor-advised fund run by Brian Boland – a former Facebook VP, and his wife Katie, who blogs prolifically about the injustices of the very wealth-building system that has enabled their activism. Katie has explicitly called the treatment of capital gains taxes a “core injustice”, and Brian has been vocal in his support of wealth taxes.
The Tax Foundation’s recently published Options for Reforming America’s Tax Code 3.0 has evaluated a large range of possible tax policy changes and scored the economic impact they would have, if enacted.
Taxing capital gains at ordinary rates would result in the elimination of 64,000 jobs, and reduce GDP by 0.1%.
Expanding the Net Investment Income Tax to active income costs another 54,000 jobs and shaves 0.2% off the GDP.
Eliminating business interest deductibility – PESP’s signature ask – is the most economically destructive option in the entire guide – a 1.6% reduction in GDP and 427,000 fewer jobs.
The Tax Foundation found that eliminating step-up in basis would raise $206 billion, but accomplish nothing else economically. It is a pure wealth extraction forcing family members to pay the government when a loved one dies.
The tax agenda championed by PESP, Patriotic Millionaires, and the Bolands would stifle economic growth, suppress earnings, and result in hundreds of thousands of job losses. Despite proponents framing these measures as closing loopholes, or taxing the rich, the real world consequences would be the systematic taxation of investment until it is nonviable.
For anyone who feels strongly that wealthy Americans aren’t paying enough, there’s good news: the U.S. Treasury accepts Gifts to the U.S. Government – voluntary contributions that require no Act of Congress.
Each of these groups claim to fight for workers, and that these tax changes would help Main Street. But the modeling is unambiguous: the policies would reduce employment, reduce wages, economic growth, and reduce investment. The people hurt most by a contracting job market aren’t billionaire’s, it’s the workers they claim to represent.
Decision-makers considering the next round of tax reform should recognize this coalition clearly as an ideologically unified campaign funded by billionaire progressive donors.
Subscribe to Pinpoint Policy Institute