San Diego Law Review

Library of Congress Authority File


Document Type



This Article addresses some of the inequities and offers a multi-faceted proposal to raise revenue and incentivize preferences for a more balanced approached to tax policy. First, I advance a proposal that offers solutions to shift certain aspects of the capital gains tax preferences toward the middle and lower class. To balance the costs, I then propose an option to phase out or eliminate other preferences that primarily benefit the wealthiest taxpayers. This balanced approach will allow the government to raise revenue and change the capital gains tax preferences from a rewards to an incentive-based system. Part II of this Article focuses on the capital gains tax and provides an abbreviated historical background about the preferential rates for capital gains taxes. This discussion includes research supporting the assertion that the wealthiest taxpayers have predominantly benefitted from the capital gains preferential rate, and suggestions to limit the preferential rates based on income levels. Part II also analyzes tax preferences of capital income and demonstrates how policies have failed to encourage the disposition of property to generate revenue. This Part includes reforms necessary to encourage taxpayers to dispose of capital property by proposing policies that remove the benefits associated with holding property for long periods of time. This Part also discusses widening income and wealth inequalities and how the capital gains tax has contributed to these inequalities. Part III begins with a discussion of the income tax implications of the capital gains tax when property passes through the estate. The discussion will conclude with the gross inequities associated with capital property that passes through an estate to a beneficiary. Part IV analyzes the best solutions for reforming capital gain tax policiesthrough the estate. The proposed reforms will create horizontal equity between taxpayers who receive capital property via lifetime transfers and taxpayers who receive capital property via death transfers. This section also discusses the impact of capital gains preferences and analyze how tax preferences on capital income have failed to encourage disposition of property and reforms necessary to encourage taxpayers to dispose of capital property. Part V provides a conclusion.