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This article explores a troubling trend in U.S. tax policy, specifically the proposed tax law change that favors the wealthy. It highlights the complexity of the U.S. tax system, which is often a source of confusion. Discussions around taxation should receive as much attention as broader governmental programs, as the redistributive effects of tax policies significantly impact wealth distribution. Many EU countries have regressive tax systems due to their reliance on VAT; however, they counterbalance this with very progressive spending, ultimately resulting in a net progressive stance.
In the U.S., the complexity of taxes largely serves to support a lucrative industry of tax preparers, accountants, and highly compensated tax lawyers. As a result, media coverage often oscillates between outrage over the low tax contributions of certain individuals and corporations and a disregard for the political machinations that create such disparities.
By Beverly Moran, Professor Emerita of Law, Vanderbilt University. Originally published at The Conversation
Following a summer peak in U.S. housing prices, where the median home sold for US$435,000 in June, President Donald Trump announced he was considering a plan to exempt home sales from taxation.
Advocates, including U.S. Rep. Marjorie Taylor Greene, who introduced the No Tax on Home Sales Act in July, argue it would provide relief for working families by erasing taxes on family home sales.
However, the reality is that most Americans who sell homes already do so without incurring taxes. The primary beneficiaries of Trump’s proposal would be those who own highly valued real estate.
As a legal scholar focusing on the implications of tax policies on racial and economic inequality, I view this proposal as part of a recurring trend: measures that are marketed as assistance for average families but predominantly favor affluent individuals.
Many Families Already Sell Their Homes Tax-Free
As it stands, the Internal Revenue Code allows singles to exclude up to $250,000 from taxable gains on home sales, while married couples can exclude $500,000. In reality, approximately 90% of home sales result in gains lower than $500,000, meaning the vast majority of sellers already pay no tax.
The only group likely to gain new advantages under Trump’s proposed tax law comprises those with over $500,000 in appreciation, typically owners of high-value properties in booming markets. A study by Yale’s Budget Lab suggested that the average benefit from this exemption would be around $100,000 per qualifying seller.
Furthermore, homeownership is not evenly distributed across the U.S. population. Around 44% of Black Americans own homes, compared to 74% of white Americans, and this racial disparity has only widened over the last decade. Single women, particularly women of color, encounter compounded challenges in homeownership.
A Larger Pattern of Wealth Inequality
While still in the proposal stage, the tax-free home sales initiative is indicative of a broader trend within Republican tax policies which tend to have regressive implications. In this framework, the bulk of benefits are directed toward high-income groups, leaving minimal assistance for low-income populations, all under the guise of supporting the working class.
Trump introduced the tax exemption idea shortly after signing a significant tax and spending package in July 2025. This legislation faced criticism due to its focus on tax cuts for the wealthy while making almost a trillion dollars in cuts to health care services for low-income and disabled individuals.
The proposal for tax-free home sales follows a similar pattern and resonates with the distributional implications established by his 2017 Tax Cuts and Jobs Act. This reform exacerbated income and racial wealth disparities, allocating 80% of its benefits to corporations and affluent individuals. My research indicates that white households received over twice the tax benefits compared to Black households from this legislation.
The same dynamics would unfold in this proposed tax policy regarding home sales. The elimination of capital gains taxes would mainly benefit the 29 million homeowners with significant equity—a demographic that is predominantly white, male, and upper-middle-class. In contrast, millions of renters, who are disproportionately non-white and female, would remain overlooked, risking cuts to vital social programs needed to sustain such tax incentives.
