Wealth, Estate, and Retention Revenue
Engine: Engine 1, Engine 9
Framing
The Accord taxes stock wealth at three points: annually above a high threshold, at death, and at expatriation. Each instrument addresses a specific avoidance channel.
Constitutional basis
A standalone federal wealth tax inherits the Pollock v. Farmers' Loan & Trust (1895) problem — direct taxes on property require apportionment by population. The 16th Amendment cured that defect for income only; it did not extend to wealth. The Accord routes around the constraint via Knowlton v. Moore (1900), which upheld the federal inheritance tax as an excise on the transfer of property at death — not a direct tax on the property itself. The Estate Tax Prepayment Plan is structured as installment prepayment of that estate-transfer excise: a Congressional power held undisputedly since the Revenue Act of 1916, settled doctrinally by Knowlton, and reconciled at death against estate-tax liability. The architecture is not a wealth tax in the Pollock sense; it is a forward-collected estate-transfer excise.
Annual Estate Tax Prepayment
Threshold: $10M individual / $20M joint (with filing testament; equity equally split)
Rates: 0.75% on $10M–$50M · 1.0% on $50M–$250M · 1.5% on $250M–$1B · 2.0% on $1B–$10B · 2.5% above $10B
Assessment: annual, based on net worth per statutory definition
Collection: quarterly, via Treasury
The Plan serves three purposes simultaneously. (1) Current-year revenue — the rate genuinely collects from large fortunes throughout life rather than waiting until death. (2) A catalog — annual filings produce agreed valuations, established basis for estate tax and capital-gains-at-death, and the transparency that lawful transitions at scale require. (3) A compounding dampener that reduces late-life expatriation pressure — annual prepayment paired with capital-gains realization on the shares sold to fund it slows the rate at which fortunes compound untaxed; the larger the at-death liability grows, the stronger the incentive to expatriate before it fires, so steady collection through life reduces the eventual settlement shock.
Estate tax
Brackets: 35% on $10M–$50M · 45% on $50M–$250M · 55% on $250M–$1B · 60% above $1B
Stepped-up basis: eliminated (see Chapter 7). Death is a realization event; unrealized gains realize at transfer (top capital-gains rate 55% via CGAL convergence + 55% top ordinary).
Annual prepayments credit dollar-for-dollar against estate tax at transfer. The Plan cannot collect more, in total, than estate tax owed at death.
Accession tax — heir-side, lifetime ledger
The accession tax follows the recipient. When wealth transfers, the heir's personal accession is taxed on a separate lifetime ledger so that wealthy heirs cannot slice large inheritances into annual income brackets.
Brackets (lifetime cumulative accession received): 15% on $2M–$10M · 25% on $10M–$50M · 35% on $50M–$250M · 40% above $250M. First $2M lifetime exemption.
Accession is treated as accession income, integrated with the income-tax system on a lifetime ledger. The heir's wage income runs through ordinary brackets separately; accession layers on top. Public framing: a paycheck and a billion-dollar inheritance are not morally identical, but both increase ability to pay.
Combined transfer effect at the top, post-gain-tax: estate leaves 40%, accession leaves 60% of that → heir receives ~24% intact.
Generation-skipping transfer tax — layered on accession
GST applies at 40% top rate to direct skips and dynasty-trust deemed-accession events. GST is a LAYER on the accession tax in skip cases — not a separate event sequenced after accession. A grandchild receiving from a grandparent pays the accession tax on the receipt, and GST is the additional surcharge for bypassing the parent's settlement layer.
Trusts lasting longer than 30 years pay periodic deemed-accession — they cannot escape the settlement chain by lasting longer than mortality. Disabled-dependent and direct medical/educational support continue with strict-limit exceptions.
The Accord welcomes wider-family dispersion (children, grandchildren, nieces, nephews, extended family). What is taxed is concentration: bypassing the ordinary generational settlement chain via dynasty trust or skip. The doctrine: dissipate dynasty, not abolish inheritance.
Institutional Investment Excise (a tax on tax-exempt equity)
Tax-exempt status is a privilege, not an entitlement. The Accord asserts that subsidized institutions — university endowments, private foundations (including family-controlled), religious endowments, hospital systems, museums — contribute to the public infrastructure that produces their investment returns. The mechanism is an annual excise on investment assets above a $5M deduction and a 24-month operating-reserve safe harbor.
The rate is one-third of the lower of trailing 2-year and 5-year real S&P 500 total return, floored at zero. In a strong bull market with 12% real return, the rate runs ~4.0%; at the historical 4.2% average, ~1.4%; in a crash or stagnation year, zero. The "lower of two windows" rule gives institutions the more favorable rate in all market conditions — the 2-year window drops faster after a crash, the 5-year window restrains the rate when valuations are stretched. The institution always keeps two-thirds of real growth.
Mission-deployed assets are exempt: campuses, classrooms, dormitories, hospital facilities, houses of worship, parsonages, parochial schools, farmland actively farmed, equipment in use. Investment assets above the $5M deduction and the operating-reserve safe harbor are taxable. The same rule applies universally — Harvard, the Gates Foundation, a community foundation, a megachurch, a small Presbyterian church with $200K in savings (well below threshold, $0 owed). One rate, one threshold, one rule for all institutions. No favored class. No threshold gaming.
This single instrument replaces several earlier proposed mechanisms that were rejected through iteration: the 50-year deemed-realization rule on dynasty trusts and foundations (unenforceable; valuation games; political target); EPL inclusion of family-foundation assets in the founder's estate-tax-prepayment calculation (constitutionally fragile because the foundation has no individual beneficial owner); fixed 1.4% rate on large endowments only (threshold gaming); fixed 1.0% on assets above $1B (fractionation incentive). The continuous excise resolves all four issues at once.
Total US tax-exempt investment assets are ~$3-4T. Taxable base after $5M deductions and operating reserves: ~$2.5-3T. At a long-run average rate of 1.4%, the institutional excise produces approximately $35-42B/yr in normal markets — counter-cyclical, mild, automatic stabilizer. The chapter's purpose is philosophical completion of the lifecycle architecture, not revenue maximization. Because every form of capital contributes, rates elsewhere can stay moderate.
Honesty about enforcement limits: the IRS has jurisdiction over domestic tax-exempt entities. The Accord does not propose a holding-cost excise on foreign sovereign wealth funds beyond IRS jurisdiction; foreign sovereign US holdings are addressed through Section 892 repeal (collecting dividend withholding via existing broker infrastructure), the Financial Transactions Tax (transaction friction), and Alliance Incentive-linked market access regulation.
Civilization Premium / expatriation
The Accord imposes an expatriation realization event: renouncing US tax residence triggers deemed sale of all assets at fair market value and immediate tax on accrued gains. This is the enforcement backstop for the Civilization Premium engine (see Chapter 23).
Why five instruments, not one
Annual wealth taxes alone have a known failure mode: liquidity mismatch, where a family-owned business or founder's stock cannot be liquidated to pay the annual installment. The five-instrument structure mitigates this and addresses dynastic transfer at every point where economic power changes form. (1) Capital gains realize at death — closes the buy-borrow-die loophole. (2) The Estate Tax Prepayment Plan is small enough to be payable from income or modest asset sales — collects throughout life and dampens late-life expatriation pressure. (3) Estate tax settles the decedent's accumulated claim at death when liquidation is generally manageable; prepayments credit dollar-for-dollar. (4) Accession tax follows the recipient's personal enrichment on a lifetime ledger. (5) GST applies as a layer on the accession when the transfer skips a generation, preventing dynasty-trust escape from the settlement chain. The expatriation realization event (Civilization Premium / §877A) backstops avoidance via departure. Each instrument carries part of the load; none carries the whole.
Sequence of settlement at transfer: capital gains realize at death (55% top); estate tax settles on the post-gain wealth (35/45/55/60%); cumulative prepayments credit dollar-for-dollar; the net flows to the heir, whose lifetime-accession ledger is updated and accession tax applies (15/25/35/40%); if the transfer skipped a generation, GST is layered on the accession (40% top).
Disclosure compliance
The estate tax prepayment + estate tax architecture only works if asset disclosure is complete. The Accord introduces three companion provisions.
1. Annual disclosure schedule. Every household above the estate-tax-prepayment threshold files an annual statement listing all assets with National Statistics Board-accredited valuations. Categories explicitly enumerated to prevent definitional gaps: domestic real property, domestic securities, foreign-held securities, family-trust beneficial interests, art and collectibles, private business equity, beneficial-ownership interests in offshore entities, cryptocurrency holdings, and intangibles (patents, royalties, contractual rights).
2. Failure-to-disclose consequence. Undisclosed assets discovered during the lifetime of the holder accrue back-prepayments plus compounded interest at the federal short-term rate plus 8 percentage points, plus a 25% civil penalty on the back-tax owed. Discovered at death — or in an heir's hands within the two-generation estate-reach window — the estate cannot settle until full disclosure is complete and reconciliation is paid; heirs receive no transfer until back-prepayment, interest, and penalty are settled. **Heir liability is structural**: undisclosed assets accrue interest and penalties to the heir as well as to the holder's estate when discovered in heir hands. This is the structural enforcement that makes the prepayment work — concealment is not an alternative path, and the cost of concealment follows the asset across generations.
3. Three-year disclosure window with Year 1 lifetime sweetheart (refined 2026-05-15). **Year 1 (months 1-12)**: holders who voluntarily disclose hard-to-discover assets — paintings and other privately-held art, self-custody cryptocurrency, off-shore financial and physical assets, foreign trusts, private business interests (the full eligibleCategories list in CFG.wealth.disclosure) — pay a **lifetime sweetheart rate of 0.8%** on those specific disclosed assets. The 0.8% rate persists for the rest of the holder's life, regardless of which tier the standard schedule would otherwise assign. No back tax, no penalties, no criminal evasion review of disclosed categories. The lifetime concession is what makes Year 1 disclosure the dominant strategy — a one-year rate concession would not be enough to overcome a holder's expected discovery probability over a multi-decade horizon. **Year 2 (months 13-24)**: 1.0% in the disclosure year + retrospective back-tax (with applicable interest), no penalties; the asset rolls into the standard graduated schedule after that year (not lifetime favorable). **Year 3 (months 25-36)**: standard graduated rates + back-tax, no penalties — the penalty-avoidance window. **After Year 4 / undisclosed-and-discovered**: standard schedule + back-tax + civil penalty + compounded interest, with heir liability per §2 above. The window is designed to surface the historical inventory; the Accord's enforcement architecture is more effective with that inventory complete.
Already-discoverable categories (registered securities, US real estate with deed records, EIN-businesses, US-exchange crypto, etc.) do NOT qualify for the Year 1 lifetime rate — the IRS could have found them anyway. Those assets enter the standard graduated schedule from Year 1.