Proposals advanced by some democratic socialists could extend tax burdens beyond the ultra-wealthy to individuals and families with assets and incomes exceeding $1 million, according to an analysis of Michigan Senate candidate Abdul El-Sayed's tax platform.
El-Sayed's proposed policies include taxing capital gains above $1 million as ordinary income, rather than at preferential long-term capital gains rates. This approach could affect individuals who sell assets built over decades, such as small business owners selling their company, which may represent their primary retirement savings. The analysis posits that this differs from taxing hypothetical billionaires on yachts, instead impacting those cashing in on significant business gains.
The proposals also target inheritances. El-Sayed supports eliminating the stepped-up basis, which would mean heirs could be subject to taxes on the appreciated value of assets inherited. For perspective, the federal estate tax exclusion is set at $15 million per individual. However, the analysis suggests that combined assets such as a home, retirement accounts, and a small business could push a family's net worth over the $1 million threshold, potentially including life insurance proceeds without accounting for estate taxes.
Furthermore, El-Sayed advocates for eliminating the Social Security payroll tax cap. Currently, wages are taxed up to $184,500 (in 2026) at 6.2% for employees and employers. Removing this cap would mean individuals earning $1 million or more would contribute significantly more in Social Security taxes, an increase that would also be matched by their employers.
The candidate also supports a progressive tax on wealth held in trusts. The analysis notes that trusts are utilized by families for various planning purposes beyond the exclusive use of billionaires, including estate planning and asset management.
Collectively, these proposals aim to increase tax contributions from those with substantial earnings, capital gains, inheritances, and wealth held in trusts. While supporters argue such policies would increase contributions from the wealthy and potentially offer exemptions for lower earners, critics contend that these tax changes could disincentivize investment, business sales, and wealth transfer across generations.
The Democratic Socialists of America's national program explicitly calls for aggressive wealth taxes. El-Sayed's specific policy proposals are presented as an example of how such a philosophy translates into concrete policy, with the analysis emphasizing that the $1 million threshold could affect a much larger segment of the population than the roughly 800 billionaires in the United States.