The Unified Income Tax

A dual-schedule system preserving middle-class capital incentives while converging labor and capital taxation at the highest brackets.

Schedule A (Ordinary Income)

13 brackets with top rate of 49%. The employee TCL share (10%) is deductible from AGI before these brackets apply.

Schedule B (Favored Instruments)

Preserves the 20% long-term capital gains rate for the first $3 million in realized gains annually, subject to the CGAL lifetime cap (below). Short-term gains taxed as ordinary income (unchanged from current law).

High-Income Convergence

Maximum Capacity Tier (>$10M): 49% on all income from all sources.

Capital Gains Allowance Ledger (CGAL)

Tracks a strict $10 million lifetime cap on favored-rate gains. Once exhausted, all subsequent gains are taxed at ordinary Schedule A rates. The CGAL is the unifying anti-avoidance mechanism—closing preferential rate arbitrage at ordinary realization, at exit, at inter-generational transfer, and at death through a single instrument rather than layered transaction-specific rules.

Two-Year Averaging

Taxpayers may irrevocably elect to average Schedule B income over two consecutive years to prevent "lumpy realization" penalties on one-time business or farm sales.

Structural Rules

SALT deduction capped at $20,000 ($40,000 joint). §1031 Like-Kind Exchanges restricted to real property in a trade or business, with mandatory CGAL tracking—gain deferred but CGAL reduced by the deferred amount.

Scoring Endnote 3: Income Tax Revenue

CBO baseline individual income tax (Year 10): ~$3.88T.

Convergence tier increment: 49% tier (>$10M) affects ~180K filers. Increment above current brackets: ~$0.96T.

Accord total income tax (before closures): $3.88T + $0.96T = $4.84T. With base-broadening (Chapter 4): $4.84T + $0.30T = $5.14T.

⚠ Income tax avoidance rate: 8%. CBO standard is ~15% for individual income tax. Reduced to 8% because: SFA eliminates transfer pricing (closes ~$100B in offshore income), CGAL eliminates capital gains rate arbitrage (closes ~$50B), FedCard passive compliance (closes ~$30B). If avoidance remains at 15%, income tax revenue declines by ~$0.35T.

CGAL revenue interaction: the $10M lifetime cap means ~180K taxpayers currently exploiting preferential rates will exhaust their allowance within 5-10 years, at which point all gains are taxed at ordinary rates. This produces a delayed revenue ramp of ~$0.05-0.10T/yr starting ~Year 5.