Beginning in the early 20th century, a new ethos for taxes took hold: Taxes should be imposed on the basis of means, with the greatest burden falling to those with the greatest capacity to pay.

Such “tax the rich” sentiments informed the design of the two tax rules at the core of the modern tax system: the income tax, adopted in 1913, and the estate tax, adopted three years later, in 1916. The income tax had “progressive” tax rates, meaning taxes were higher for people with more taxable income; and it exempted many lower-income Americans altogether. And the estate tax was designed to impose a separate tax on the richest Americans as they pass their wealth to the next generation.

These two taxes originally applied to only the very wealthy, leaving more than 95 percent of Americans unaffected. But even when the income tax system was expanded to apply more broadly to fund World War II (which is sometimes described as moving it from a class tax to a mass tax), the focus on the rich was maintained.

Our income and estate taxes are still structured the same way, with progressive income tax rates and an estate tax that only applies to the richest Americans. Yet evidence shows that these taxes are not doing what they purport to do.

The capacity of the income tax to take the most from people who can most afford it has been undermined by wealthy people’s avoidance of taxable income. Economists and tax experts have long recognized the ability of the wealthy to avoid taxable income, but with secrecy around tax returns, it was difficult to uncover real-world examples. This all changed in June 2021, when journalists at ProPublica published a series of articles based on actual tax returns leaked by an Internal Revenue Service (IRS) contractor (his name: Charles Littlejohn, like the Robin Hood character). These tax returns confirmed that many of the richest Americans — like Jeff Bezos, Elon Musk and Michael Bloomberg — were able to avoid income taxes altogether by avoiding taxable income.

The other plank of the tax code, the estate tax and gift tax (along with the generation-skipping transfer tax, adopted to fortify the estate and gift tax in 1986), was explicitly designed as a bulwark against large intergenerational transmissions of wealth. They promised to preserve an egalitarian American society for many decades they largely did.

But the estate tax, like the income tax, is no longer doing what it was designed to do. While there is no Charles Littlejohn-style cache of elite tax returns to substantiate how the tax isn’t working, the American economy itself provides the proof. Concentrations of wealth have moved from historic lows in the 1970s to heights not seen since before the advent of the modern US tax code. And while the richest Americans control more wealth than ever, the amount of money raised........

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