If capital gains and ordinary income tax rates were equalized, the change could be tax neutral and remove 125 million people from the tax roll, with anyone making $100,000 or less paying no taxes.

The claim has two parts: (a) taxing capital gains (and dividends) at ordinary income rates would raise enough revenue to make up for exempting people earning $100,000 or less from tax, so the package is roughly revenue-neutral; (b) about 125 million people (or tax filers) earn $100,000 or less, so would leave the tax roll. True: independent estimates (JCT, CBO, Tax Policy Center, Penn Wharton, Tax Foundation, IRS statistics) show the revenue gained is roughly equal to the revenue lost (within about 15%) and that about 125 million people or filers (within about 15%) are at or below $100,000. Mostly true: both parts roughly hold but one figure is moderately off (for example, the revenue offset falls 15 to 30% short, or the count is 100 to 150 million). Mixed: one part holds and the other clearly fails. Mostly false: the count is roughly right but equalizing rates would raise only a small fraction of the revenue needed, or the reverse. False: both parts are clearly wrong, for example equalization raises well under half the needed revenue and the count is far from 125 million. Exemption here means paying no federal income tax.

Set before the research began.

1. E1 Principles-Based Illustrative Reforms of Federal Tax and Spending Programs | Penn Wharton Budget Model Penn Wharton Budget Model (University of Pennsylvania) · 4 December 2024

   “| Policy | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2025-2034 | 2025-2054 | |---|---|---|---|---|---|---|---|---|---|---|---|---| | Tax capital gains and dividends at ordinary rates | 37 | 60 | 40 | 39 | 41 | 42 | 44 | 45 | 47 | 48 | 444 | 1,800 |”

2. E2 Principles-Based Illustrative Reforms of Federal Tax and Spending Programs | Penn Wharton Budget Model Penn Wharton Budget Model (University of Pennsylvania) · 4 December 2024

   “This policy change would remove that preferential rate structure and the distinction between preferred and ordinary income, taxing all income from capital gains and dividends using the ordinary income tax rate structure, including rates and thresholds.”

3. E3 charts.html Penn Wharton Budget Model · January 2020

   “Tax capital gains and dividends at ordinary rates | 14 | 18 | 18 | 19 | 20 | 15 | 15 | 16 | 17 | 18 | 173”

4. E4 Five Different Ways of Raising Taxes on the Wealthiest Americans Peter G. Peterson Foundation · 25 September 2026

   “Taxing capital gains like ordinary income: In its proposed 2024 budget, the Biden Administration estimates that taxing capital gains at the same rate as ordinary income for taxpayers with income over $1 million would increase revenues by $214 billion over the next 10 years.”

5. E5 Addressing the Need for More Federal Revenue Citizens for Tax Justice · 8 July 2014

   “Congress should go much further and repeal the capital gains break that still exists. Under this proposal, capital gains would simply be taxed at ordinary income tax rates. This would raise at least $613 billion over a decade.”

E3 and E4 describe a Penn Wharton model of taxing capital gains and dividends at ordinary rates, with a 2025–2034 total of 444. However, the quoted table does not state its units. E5–E7 give other estimates of what equalization would raise, some for narrower versions of the policy. None of the evidence estimates how much revenue would be lost by exempting people earning $100,000 or less from federal income tax, and none counts how many people or filers earn at or below $100,000. Neither the revenue-neutrality part nor the 125 million figure can be checked against the criteria.