Rep. Adam Smith Introduces Resolution Calling for Equal Tax Treatment of Wage Income and Capital Gains

WASHINGTON, D.C. (July 31, 2026) - Today, Rep. Adam Smith introduced a resolution built on a simple idea: a dollar earned should be a dollar taxed, full stop. This resolution calls on Congress to start simplifying the tax code so working-class Americans and the ultra-wealthy play by the same rules.

"For decades, we've asked working families to play by one set of rules while the wealthiest Americans play by another. A teacher, a machinist, a nurse - they see taxes taken out of every paycheck before they ever see the money," said Rep. Adam Smith. "Meanwhile, the ultra-wealthy grow their fortunes by trillions of dollars a year; paying next to nothing in taxes due to loopholes emplaced quietly over the past 40 years. It's time we started simplifying the tax code around one basic principle: a dollar earned is a dollar taxed, no matter who earns it or how."

"This resolution tells Congress and the Ways and Means Committee to stop looking away from a system that treats identical gains completely differently depending on whose name is on them. If we're serious about the debt and serious about fairness, this is where we have to start."

The resolution has drawn early support from tax law experts, including Ray D. Madoff, Professor at Boston College Law School and author of "The Second Estate: How the Tax Code Made an American Aristocracy."

"I've spent years studying this issue, and the fix isn't complicated: broaden the income tax so it captures every form of monetary gain, not just wages. This resolution asks the correct, and long overdue questions. I'm glad to see Congress willing to take a serious look at why our tax code treats income so differently depending on where it comes from," said Ray D. Madoff, Professor at Boston College Law School.

Here's the problem:

• The country is $39 trillion in debt - and the tax system isn't bringing in enough money to keep up, because too much income never gets taxed in the first place.

• Regular paychecks are carrying the load. Income taxes make up about 49% of all federal revenue, and payroll taxes make up another 35% - meaning 84 cents of every federal dollar comes from taxes on wages. Taxes on investments, inheritances, and business ownership make up the rest.

• The wealthiest 1% now hold about $55 trillion in net worth, while most Americans don't have enough savings to cover an emergency. Seventy years ago, top earners paid a 94% tax rate on that income. Today the top rate is just 37% - and many still pay far less through additional loopholes.

• Billionaires can grow richer by billions a year and barely pay taxes on it, because that money comes from stock and business ownership going up in value, not a paycheck. A dollar earned that way isn't taxed anywhere near like a dollar earned at a job.

• Some of the richest people in America pay a lower tax rate than teachers and nurses. A 2021 investigation into leaked IRS records found several of the wealthiest Americans paid a true tax rate in the low single digits, or no income tax at all due to tax loopholes, compared to how much their wealth grew each year - lower than many middle-class workers pay on their salaries.

The resolution calls on the House Ways and Means Committee to hold hearings on this gap, and urges Congress to start simplifying the tax code so every American - whether they earn a paycheck or sell a stock - is taxed the same way on the same amount of money earned.

The full text of the resolution is available [here] . A fact sheet is available [here].