Wealthy households face a tighter tax-avoidance test

For very wealthy households, the fight is not just about tax rates. It is about whether income and assets can be arranged so less tax ends up due than the law intended. In the federal Senate, Arizona Democrat Ruben Gallego has introduced a bill aimed at that problem.

The measure would amend the Internal Revenue Code of 1986 so high-net-worth individuals cannot avoid paying taxes on their income and assets. The available material does not spell out the mechanics, but it makes the target clear: the top end of the tax system.

The pressure at the top

The argument behind the bill is straightforward. When the wealthiest taxpayers can pull back from what they owe, the missing revenue does not disappear. It has to be made up elsewhere or left uncollected, which is the pressure point Gallego is trying to put back into the code.

The bill was introduced June 2 and sent to the Senate Finance Committee.