Democrats' sweeping midterm victories have renewed momentum for taxing the wealthy on a national level. Sen. Ron Wyden, D-Ore., who is set to retake control of the Senate Committee on Finance, has already put billionaires on notice. Several proposals are already before the committee, including measures to close the carried-interest tax break and impose taxes on large trust assets.
"On taxes, the committee will redouble its efforts to ensure billionaires pay their fair share and hold tax cheats accountable. Democrats will spearhead a tax agenda that puts American families first and requires the ultra-rich and corporations to pay their fair share," Wyden said in a statement Wednesday morning.
Tax lawyers told CNBC that proposed wealth taxes and other tax hikes are unlikely to become law because the Democrats have not won enough seats to overcome a veto from President Donald Trump. However, the measures are worth monitoring as they shape the party's agenda heading into the next presidential election, they said.
"The proposals are not necessarily anything that will pass over the next two years. But if there is an administration change two years from now, they do give you an indication of what might be what might be on the table during the next administration," said Justin Miller, partner and national director of wealth planning at Evercore Wealth Management.
Here are three tax proposals sitting with the Senate Committee on Finance that could gain traction after the blue tsunami.
Ending the Carried Interest Loophole Act
In April, Wyden and Sen. Angus King, I-Maine, introduced a bill eliminating the preferential tax treatment of carried interest, a popular Wall Street tax break. Under current law, fund managers can have a share of a fund's profits taxed at the lower capital-gains rate if the investments are held for at least three years. The Ending the Carried Interest Loophole Act would tax investment profits as ordinary income and also require fund managers to recognize and pay tax on deemed compensation annually, rather than deferring taxes until the fund realizes income.
Lawmakers on both sides of the aisle have proposed changing the taxation of carried interest for nearly two decades, according to Holland & Knight partner Joshua Odintz, a former tax counsel at the Department of Treasury and the Senate Committee on Finance. President Trump repeatedly criticized the provision, saying during his 2016 presidential campaign that it was "unfair to American workers."
Odintz said he expects more scrutiny of carried interest as Congress faces pressure to shore up the Social Security trust fund, which is expected to run out of reserves by the end of 2032. However, he thinks it is more likely that the tax break will be eliminated as part of a budget reconciliation bill rather than a standalone bill.
"I think an issue like carried interest have to be addressed in the context of a larger tax bill, where it's challenging for members to say, 'No, I'm going to stand up just on this one issue and crater a bill,'" he said. "It's much easier when there are a series of trade-offs, and members can point to the different trade-offs and say, 'Look, I got this. I guess I had to give up that, but on net, this is better for my jurisdiction.''"
Fair Trusts for Fiscal Responsibility Act
Sen. Patty Murray, D-Wash., introduced a bill targeting trusts used to transfer assets while minimizing or avoiding estate and gift taxes. The Fair Trusts for Fiscal Responsibility Act sets a graduated annual tax on trust assets exceeding $50 million, with the rate rising to 3% for assets above $1 billion. It would also create a withholding-credit system: taxes paid each year would be tracked in an account and credited against estate or generation-skipping taxes when assets are later transferred or the trust ends. Any unused credit against estate taxes could be refunded.
"This is something that should be watched because if it gets traction, it would fundamentally change estate planning for ultra-high-net-worth individuals," said David Blum, partner and chair of Akerman's national tax practice group.
Miller said he is skeptical that the bill would pass given how complicated it would be to implement. He thinks it is more realistic that the U.S. would follow the examples of the United Kingdom and Canada and periodically tax assets held in trust every set number of years. In the U.K., an inheritance tax is levied every 10 years, and Canada imposes a 21-year rule on most personal and family trusts.
Redistribution Of Billions by Instituting New High-income Obligations on Overlooked Debt (ROBINHOOD) Act of 2026
Several incoming Democratic senators, including James Talarico and Abdul El-Sayed, have pledged to curb the "buy, borrow, die" tax strategy practiced by billionaires Larry Ellison and Elon Musk. Wealthy founders and investors borrow against their stock to access cash without selling shares and triggering capital-gains taxes. If they hold the assets until death, heirs can also receive them with a stepped-up tax basis, leaving the accumulated gains untaxed.
The Senate's ROBINHOOD Act, introduced by Sen. Ruben Gallego, D-Ariz., in June, would make ultra-rich borrowers pay capital-gains taxes on selected long-term assets they borrow against. It would apply to individuals with at least $1 billion in assets or more than $100 million in annual income, and only when the assets' unrealized gains are at least as large as the loan.
A related House bill, introduced by Rep. Daniel Goldman, D-N.Y., would impose a 20% tax on certain loans backed by assets for borrowers with income over $400,000. The House bill exempts several types of loans, including mortgages and margin loans.
Miller said these bills are narrower and far easier to implement than the sweeping wealth tax proposals that dominate headlines. While these "buy, borrow, die" bills have gotten less attention, they have more realistic odds of passing, he said.
While tax policy gridlock is the likely outcome for the next two years, Odintz advised high-net-worth taxpayers to be proactive.
"I think concerned constituents should engage with Wyden and his staff if they see problems that were unintended based on the stated purpose of legislation. I think it's worth coming in now rather than later," he said. "If in 2029 there's a Democrat in the White House and Democrats control both houses, then we could see swift movement for a reconciliation bill that goes in the opposite direction of the OBBBA and TCJA."
