How the New American Accord finally collects a progressive share from the wealthy — with rules and consequences, not a surveillance state.
For fifty years, the loudest argument in American tax politics has been about rates, and for fifty years it has been the wrong argument. The top statutory rate has bounced between 28 and 70 percent across my adult life, and through all of it the wealthiest Americans paid single-digit effective rates whenever they chose to. The rate was never the problem. The exits were.
The current code is a building with marble doors and no walls. Wages are taxed the year they are earned, automatically, at the source — ordinary work has no exit. Wealth has a dozen. Hold instead of sell, and gains go untaxed indefinitely. Borrow against the holdings, and you have spendable cash with no taxable event. Die, and the stepped-up basis erases the gains entirely — buy, borrow, die. Route compensation through a partnership and call it carried interest. Wrap the estate in a zeroed-out trust, discount the family LLC by a third for "lack of marketability," park the remainder offshore, and dare an underfunded auditor to reconstruct it. None of this is fraud. All of it is legal. That is precisely the indictment: we built a system where avoidance is not cheating but compliance, and then professed surprise at the result.
The Accord does not respond by raising rates to punitive levels. After calibration, its top rates are lower in several places than the numbers progressives usually demand — the converged top rate on all income launches at 52 percent and is built to decline to 49 as the surplus proves out; the estate tax tops out at 40, not the 60-plus of older drafts. The Accord responds instead by doing the unglamorous thing: it closes the exits, all of them, by name.
What a payment is called no longer changes whether it is taxed; what it is does. Capital gains converge with ordinary income above a generous lifetime allowance. Death is a realization event — and so is a gift, so the chain cannot be compressed by giving early. Every asset carries one value per year: the value you declare for the annual prepayment is the value at the estate, is the heir's basis. Lowball it today and you have signed a confession your own estate must answer. Family-entity discounts are gone. Trusts are classified by their powers, not their labels — a "charitable" structure the family still controls pays the dynasty rate, and the dynasty rate is calibrated so that warehousing wealth across generations surrenders its real growth to the public. Park it, and the public collects the same share it would have collected had the generations actually settled. Warehousing is never the cheaper road. That is not confiscation; the principal stays, keeping pace with inflation, forever. It is simply the end of the free option.
And one mechanism above all, because it closes the schemes nobody has invented yet: the Accord requires the avoidance industry to report its own inventions. Any promoter, lawyer, or advisor who markets a scheme bearing the statutory hallmarks of tax avoidance must register it within thirty days, the scheme number rides on every return that uses it, and the penalty for silence falls on the advisor — personally. The United States has never fielded this. The United Kingdom has, since 2004, and the result was not litigation forever; it was the near-disappearance of the marketed-scheme industry within a decade. Australia paired a general anti-avoidance rule with promoter penalties and a dedicated taskforce and now collects from multinationals and high-wealth families that had treated the Pacific as a planning jurisdiction. These are not Scandinavian stories of cultural compliance, where citizens mail in their taxes out of civic warmth. They are stories from common-law, adversarial, lawyer-saturated systems exactly like ours — hostile terrain — where avoidance collapsed because the rules made it a losing trade. We know it works in countries that fight about taxes the way we do, because that is where it was proven.
We have even proven it ourselves, once. FATCA — an American law — ended Swiss banking secrecy not by surveilling anyone but by attaching a 30 percent withholding cost to institutions that refused to report. The banks did the math and complied. The Accord generalizes that lesson: do not watch; price.
Here is what the Accord does not do, because I want this said plainly. It does not track your purchases. It does not monitor accounts. The measurement system that guides public investment publishes neighborhood aggregates under strict differential privacy; raw transaction data is purged in ninety days; identifiable data requires a warrant, not a subpoena, and every official look is logged and publicly reported. For the 99-plus percent of Americans below the wealth threshold, the Accord's entire reporting footprint is smaller than today's: one payroll line instead of three, no insurance paperwork, benefits that arrive without an application. For the small number of households above ten million dollars, the obligation is one annual schedule of assets at accredited valuations — roughly what a bank already requires for a large loan. That is the whole intrusion. A filing.
The enforcement is not surveillance either. It is arithmetic about the future. Concealed wealth must stay concealed not for one audit cycle but forever — past the holder's death, through two generations of heirs, every divorce, every estranged child, every disgruntled employee of every family office, every data leak (and the leaks now arrive about every three years), every whistleblower entitled to up to thirty percent of the recovery, every foreign bank that reports automatically because withholding is more expensive than honesty. No statute of limitations runs on an undisclosed asset; the back-tax compounds; the liability follows the asset into the heirs' hands. Run that math over thirty years and concealment is not a moral failure — it is a bad investment. The Accord's disclosure window even prices the off-ramp: declare in the first year and the past is settled at a lifetime concessionary rate. We are not asking the wealthy to be virtuous. We are making honesty the dominant strategy and letting self-interest do the collecting.
And past the rules, a bright line the current code never drew: schemes whose only purpose is avoidance carry strict liability, and concealment is felony fraud — for the filer and for the professionals who built it. The marble-door era, where the worst outcome was repaying what you owed anyway, is over.
The result is a system where the wealthy pay a genuinely progressive share — effective rates rising smoothly through the distribution to roughly half at the very top — at statutory rates moderate enough to be durable, collected through mechanisms boring enough to survive every news cycle. The bottom seventy percent of households come out ahead in cash. Ordinary filers do less paperwork than they do today. And the fortunes that fund the public platform they were built on can no longer exit through the walls, because for the first time, there are walls.
That is not a welfare state and it is not a surveillance state. It is a country that finally wrote down its own rules and meant them.
— Bill Hersman, with Claude Fable 5 · New American Accord · newamericanaccord.org